Index Homepage Good Links Bad Links Search GuestbookForum Bonesmen BIS IMF Davos Report TABD Trilat
BAP Media Rockefeller Other Western Élites The World Central Bank centeralbahnplatz - Basel the Bank of International Settl ementsThe Bank for International Settlements Address The Tower of Basel - Centralbahnplatz 2, 4051, Basel, Switzerland httpwww.bis.orgaboutbaselmap.htm This page is the fruit of research for the UK Green Party's economics group for their 2001 mini-conference in Manchester. The BIS is the most obscure arm of the Bretton-Woods International Financial arc hitecture but its role is central. John Maynard Keynes wanted it closed down as it was used to launder money for the Nazis in World War II. Run by an inner elit e representing the world's major central banks it controls most of the transfera ble money in the world. It uses that money to draw national governments into deb t for the IMF. BIS Official Website httpwww.bis.org The Bretton Woods Project httpwww.brettonwoodsproject.org WALL STREET AND THE RISE OF HITLER. By Antony C. Sutton httpreformed-theology.or ghtmlbookswall_streetindex.html 05Aug03 - Rich Jannsen - Bank watching in Basel The BIS - Ruling the World of Money - Edward Jay Epstein Carrol Quigley quote - the bankers' plan The Network - Alfred Mendez Global Financial Institutions - Mark Evans Board of Directors - July 2001 1983 - Trading With The Enemy - A Bank for All Reasons Unraveling the Basel Capital Accord The Apex of Control Antony Sutton - B.I.S. centralbahnplatz - Basel - The Bank for International Settlements05Aug03 - Bank watching in Basel All pictures on this page are by Richard Janssen I was on business-travel from city to city in Switzerland. After the work in Bas el I went straight to the BIS to see the buildings in real life. In Basel, I noticed that there are two BIS-buildings, about a kilometer from eac hother. The 'Botta'-building at the Aeschenplatz is a former UBS-bank. It has a door with the ABN-Amro-bank next door, very strange. ABN-Amro has a indoor conne ction with BIS, I saw it with my own two eyes! After that I went to Geneva via Evian. Evian-les-Bains in France was also a plac e worth to visit. I didn't dare to take pictures of some particular buildings, because through my remarkable behavior in Basel I was followed by Securitas people everywhere I wen t. There was no place in Switzerland where I had to introduce myself, because Se curitas already knew me in advance. Of course I have been at 'Place des Nations', where all the global organisations are based. Also I've been in the most-shattered bank in Geneva the UBS-headquar ters, it was full of nasty punchholes in the glass windows because of the quite recent demonstrations. Swiss people were really flabbergasted, because such demo nstration of hooligans at the anti-globalists demonstrations are new to them. Everywhere I went, I was protected by Securitas. 'Big Bro Securitas' was watchin g me all the time. I enjoyed every minute of it, because of the predictable mann
ers of Securitas-employees. Also in Bern I was heavily protected by Securitas. Back in Basel I went into the BIS building at the Central Station Place to try t o open a bank-account. At that moment there was a press-conference going on, how strange. The Securitas-guy in front of the building recognized me, so he didn't ask a thing and let me go to do what I want to do. I asked the receptionist to open a bank account, but he lied to me that BIS is a private-bank. After that I went to the Aeschenplatz and went in. The receptionist told me fran kly that the B.I.S. IS NOT A BANK. Thanks, lady receptionist, that was exactly w hat I wanted to hear, that BIS is not a bank. Now it is confirmed by this BIS-em ployee! aeschenplatz - -Bank for International SettlementsRuling the World of Money Convenient formats for printing this article Ruling the World of Money in Rich Text Format Ruling the World of Money as a Word Document by Edward Jay Epstein -1983 Harpers Magazine reprinted from Monetary Reform Magazine - Canada website httpwww.monetary-reform.on.camain.shtml email firstname.lastname@example.org TEN TIMES A YEAR - once a month except in August and October - a small group of well dressed men arrives in Basel, Switzerland. Carrying overnight bags and atta ché cases, they discreetly check into the Euler Hotel, across from the railroad st ation. They have come to this sleepy city from places as disparate as Tokyo, Lon don, and Washington, D.C., for the regular meeting of the most exclusive, secret ive, and powerful supranational club in the world. Each of the dozen or so visiting members has his own office at the club, with se cure telephone lines to his home country. The members are fully serviced by a pe rmanent staff of about 300, including chauffeurs, chefs, guards, messengers, tra nslators, stenographers, secretaries, and researchers. Also at their disposal ar e a brilliant research unit and an ultramodern computer, as well as a secluded c ountry club with tennis courts and a swimming pool, a few kilometres outside of Basel. The membership of this club is restricted to a handful of powerful men who deter mine daily the interest rate, the availability of credit, and the money supply o f the banks in their own countries. They include the governors of the U.S. Feder al Reserve, the Bank of England, the Bank of Japan, the Swiss National Bank, and the German Bundesbank. The club controls a bank with a $40 billion kitty in cas h, government securities, and gold that constitutes about one tenth of the world 's available foreign exchange. The profits earned just from renting out its hoar d of gold (second only to that of Fort Knox in value) are more than sufficient t o pay for the expenses of the entire organization. And the unabashed purpose of its elite monthly meetings is to coordinate and, if possible, to control all mon etary activities in the industrialized world. The place where this club meets in Basel is a unique financial institution called the Bank for International Settl ements - or more simply, and appropriately, the BIS (pronounced biz in German). the bank of international settlementsTHE BIS was originally established in May 1 930 by bankers and diplomats of Europe and the United States to collect and disb urse Germany's World War I reparation payments (hence its name). It was truly an extraordinary arrangement. Although the BIS was organized as a commercial bank with publicly held shares, its immunity from government interference - and taxes in both peace and war was guaranteed by an international treaty signed in The H ague in 1930. Although all its depositors are central banks, the BIS has made a profit on every transaction. And because it has been highly profitable, it has r equired no subsidy or aid from any government.
Since it also provided, in Basel, a safe and convenient repository for the gold holdings of the European central banks, it quickly evolved into the bank for cen tral banks. As the world depression deepened in the Thirties and financial panic s flared up in Austria, Hungary, Yugoslavia, and Germany, the governors in charg e of the key central banks feared that the entire global financial system would collapse unless they could closely coordinate their rescue efforts. The obvious meeting spot for this desperately needed coordination was the BIS, where they re gularly went anyway to arrange gold swaps and war-damage settlements. Even though an isolationist Congress officially refused to allow the U.S. Federa l Reserve to participate in the BIS, or to accept shares in it (which were inste ad held in trust by the First National City Bank), the chairman of the Fed quiet ly slipped over to Basel for important meetings. World monetary policy was evide ntly too important to leave to national politicians. During World War II, when t he nations, if not their central banks, were belligerents, the BIS continued ope rating in Basel, though the monthly meetings were temporarily suspended. In 1944 , following Czech accusations that the BIS was laundering gold that the Nazis ha d stolen from occupied Europe, the American government backed a resolution at th e Bretton Woods Conference calling for the liquidation of the BIS. The naive ide a was that the settlement and monetary-clearing functions it provided could be t aken over by the new International Monetary Fund. What could not be replaced, ho wever, was what existed behind the mask of an international clearing house a sup ranational organization for setting and implementing global monetary strategy, w hich could not be accomplished by a democratic, United Nations-like internationa l agency. The central bankers, not about to let their club be taken from them, q uietly snuffed out the American resolution. After World War II, the BIS reemerged as the main clearing house for European cu rrencies and, behind the scenes, the favored meeting place of central bankers. W hen the dollar came under attack in the 1960s, massive swaps of money and gold w ere arranged at the BIS for the defence of the American currency. It was undenia bly ironic that, as the president of the BIS observed, the United States, which had wanted to kill the BIS, suddenly finds it indispensable. In any case, the Fe d has become a leading member of the club, with either Chairman Paul Volcker or Governor Henry Wallich attending every Basel weekend. It was in the wood-paneled rooms above the shop and the hotel that decisions wer e reached to devalue or defend currencies, to fix the price of gold, to regulate offshore banking, and to raise or lower short-term interest rates. bank for international settlements - above this chocolate shopORIGINALLY, the ce ntral bankers sought complete anonymity for their activities. Their headquarters were in an abandoned six-storey hotel, the Grand et Savoy Hotel Universe, with an annex above the adjacent Frey's Chocolate Shop. There purposely was no sign o ver the door identifying the BIS so visiting central bankers and gold dealers us ed Frey's, which is across the street from the railroad station, as a convenient landmark. It was in the wood-paneled rooms above the shop and the hotel that de cisions were reached to devalue or defend currencies, to fix the price of gold, to regulate offshore banking, and to raise or lower short-term interest rates. A nd though they shaped a new world economic order through these deliberations (as Guido Carli, then the governor of the Italian central bank, put it), the public , even in Basel, remained almost totally unaware of the club and its activities. In May 1977, however, the BIS gave up its anonymity, against the better judgemen t of some of its members, in exchange for more efficient headquarters. The new b uilding, an eighteen-story-high circular skyscraper that rises over the medieval city like some misplaced nuclear reactor, quickly became known as the Tower of Basel and began attracting attention from tourists. That was the last thing we w anted, Dr. Fritz Leutwiler, current president of both the BIS and the Swiss Nat
ional Bank, explained to me while watching currency changes flash across the Reu ters screen in his office. If it had been up to me, it never would have been bui lt. bank for international settlementsDespite its irksome visibility, the new headqu arters does have the advantages of luxurious space and Swiss efficiency. The bui lding is completely air-conditioned and self-contained, with its own nuclear-bom b shelter in the sub-basement, a triply redundant fire-extinguishing system (so outside firemen never have to be called in), a private hospital, and some twenty miles of subterranean archives. We try to provide a complete clubhouse for cent ral bankers ... a home away from home, said Gunther Schleiminger, the super-comp etent general manager, as he arranged a rare tour of the headquarters for me. The top floor, with a panoramic view of three countries - Germany, France, and S witzerland - is a deluxe restaurant, used only to serve the members a buffet din ner when they arrive on Sunday evenings to begin the Basel weekends. Aside from those ten occasions, this floor remains ghostly empty. On the floor below, Schleiminger and his small staff sit in spacious offices, ad ministering the day-to-day details of the BIS and monitoring activities on lower floors as if they were running an out-of-season hotel. The next three floors down are suites of offices reserved for the central banker s. All are decorated in three colors - beige, brown, and tan - and each has a si milar modernistic lithograph over the desk. Each office also has coded speed-dia l telephones that at a push of a button directly connect the club members to the ir offices in their central banks back home. The completely deserted corridors a nd empty offices - with nameplates on the doors and freshly sharpened pencils in cups and neat stacks of incoming papers on the desks - are again reminiscent of a ghost town. When the members arrive for their forthcoming meeting in November , there will be a remarkable transformation, according to Schleiminger, with mul tilingual receptionists and secretaries at every desk, and constant meetings and briefings. On the lower floors are the BIS computer, which is directly linked to the comput ers of the member central banks, and provides instantaneous access to data about the global monetary situation, and the actual bank, where eighteen traders, mai nly from England and Switzerland, continually roll over short-term loans on the Eurodollar markets and guard against foreign-exchange losses (by simultaneously selling the currency in which the loan is due). On yet another floor, gold trade rs are constantly on the telephone arranging loans of the bank's gold to interna tional arbitragers, thus allowing central banks to make interest on gold deposit s. Occasionally there is an extraordinary situation, such as the decision to sell g old for the Soviet Union, which requires a decision from the governors, as the B IS staff calls the central bankers. But most of the banking is routine, computer ized, and riskless. Indeed, the BIS is prohibited by its statutes from making an ything but short-term loans - most are for thirty days or less - that are govern ment-guaranteed or backed with gold deposited at the BIS. The profits the BIS re ceives for essentially turning over the billions of dollars deposited by the cen tral banks amounted to $162 million last year. AS SKILLED as the BIS may be at all this, the central banks themselves have high ly competent staff capable of investing their deposits. The German Bundesbank, f or example, has a superb international trading department and 15,000 employees at least twenty times as many as the BIS staff. Why then do the Bundesbank and the other central banks transfer some $40 billion of deposits to the BIS and the reby permit it to make such a profit
For example. But the BIS is no t a monolithic institution artfully concealed within the shell of an internation al bank. representin g the eight European central banks. drawn from the eight Eu ropean central banks (England. Swe den. meets for long sessions on the Monday afternoon of the Bas el weekend. The OECD got the message and abandoned its effort. there is another Chinese box called the Group o f Ten. even though they are not BIS members. economic stimulation (or suppression) . such as interest rates. which controls most of the transferabl e money in the world. Despite its name. which meets on the Tuesday morning of each Basel week end. The board also meets twice a year in Basel with the central banks of Yugosl avia. France.than a bank. Just eig hty-six of its 298 employees are ranked as professional staff. Directly under the G-10. when the Organization for Economic Cooperation and Development in Paris appointed a lowlevel committee to study the adequacy of bank reserves. if the BIS places f unds in Hungary. secrecy. Belgium. is a small unit called the Monetary and Economic Development Department. Poland. the individual central banks do not have to answer to their gov ernments for investing in a communist country. the central banks create a convenient screen behind which they can hide their own deposits and wit hdrawals in financial centers around the world. technical organization. the central bankers rega rded it as poaching on their monetary turf and turned to the BIS board for assis tance. which is loc
. money -supply growth. it seems to be a small. sits in on all the G-10 meetings. like a series of Chinese boxes one inside another. the unit released a blue b ook on currency intervention by central banks that laid down the boundaries and circumstances for such actions. And last May.S. This powerful group. For example. When there are internal disagreements. a few years ago. under the head of Ban king Supervision at the Bank of England. From the outside. the BIS is far more. then assigns the appropriate research and analysis to the half dozen economists on his staff. and the Netherlands). with a convenien t party line. OVER A BRATWURST-AND-BEER lunch on the top floor of the Bundesbank. This unit also produces the occasional blue-bound economic papers that provide central bankers from Sin gapore to Rio de Janeiro. To deal with the world at large. and catering to all its special needs. Italy. It is here that broader policy issues. it s private think tank. or simply the G-10. It provides a formal appa ratus for dealing with European governments and international bureaucracies like the IMF or the European Economic Community (the Common Market). Switzerland.if not always resolved. a recent paper called Rules versus Discretion An Essa y on Monetary Policy in an Inflationary Environment. Hungary. it also has one unofficial member the governor of the Saudi Arabian Monetary Authority. And the central banks are apparen tly willing to pay a high fee to use the cloak of the BIS. which is. The board defin es the rules and territories of the central banks with the goal of preventing go vernments from meddling in their purview. to preempt the issue. and the Ba nk of Japan. but generally they reflect a consensus of the G-10. in effect.and pay to support. and currency rates are d iscussed . are the real groups and services the central bankers need -. however.One answer is. The board then arranged for a high-level committee. Germany. The first box inside the bank is the board of directors. politely defused the Milton Friedmanesque dogma and suggested a more pragmatic form of monetarism. Fed. the Belgian economist Alexandre Lam falussy. The head of this unit. and other Eastern bloc nations. There is. of course. the Bank of Canada. these blu e books can express positions sharply contrary to those held by some BIS members . For example. By commingling part of their reserves in what amounts to a gigantic mutual fund of short-term investments. just before the Williamsburg summit conference. It actually has eleven full-time members. the U. a far more important reason why the central banks regularly t ransfer deposits to the BIS they want to provide it with a large profit to suppo rt the other services it provides.
First there is th e meeting on the Gold Pool.ated in a huge concrete building (called the bunker) outside of Frankfurt. The Bank of France is see n as a puppet of the French government. at still another level of the BIS a sort of inner club. While in theory the Bank of Italy i s under government control. then. as he put it. dealing with many of the same problems. indeed. This is an easy position for Leutwiler to hold. though the Bank of England is under the thumb of the British government.but he need not follow their counsel. after lunch. Lord Richardson was accepted by the inner club because of his personal adherenc e to this defining principle. which also seems to demarcate the inner club from the rest of t he BIS members.
. they worked close ly with each other. F inally. in practice it is an elite institution that acts aut onomously and often resists the government. The prime value. the line is drawn at the Bank of England. is the firm belief that central banks should act independently o f their home governments.S. even to the BIS g overnors. at least espouses the principle of autonomy. Pöhl joked. Far more important. and the retired gover nor of the Bank of England. its chairman.) Almost as independent is the Bundesbank.even in Switzerland. Some of us are very old friends. Dini was at the IMF in Washington. and Cana da]. He even refuses to fly to Basel in a government plane. The Fed is only a shade less independent than the Bundesbank Volcker is expected to make periodic visits to Congress and at least to take calls from the White H ouse . Pöhl had worked closely with Leutwiler in neighbo ring Switzerland for two decades. lacking the years of business and personal contact. Pöhl said. Pöhl is not required to consult with government officials or to an swer the questions of Parliament . but everyon e in Europe has heard of Leutwiler. And they all speak the same langu age when it comes to governments. He concluded They are long and strenuous . and thus remain on the outside. the same faces show up at the G-1 0. In any case. Lamberto Dini of the Bank of Italy. Lord Gordon Richardson (who had presided over the G -10 meetings for the past ten years). (In 1979. probably won't be admitted to the in ner circle. Leutwiler from the Swiss National Bank. and the European Community meeting [which excludes Sweden and Switzerland f rom the previous group]. Pöhl and Volc ker were both undersecretaries of their respective treasuries. using unofficial channels. as its president. Karl Otto Pöhl.even about such critical issues as raising in terest rates. Pöhl recounted how he has found himself using English with Leutwiler.and they are not where the real business gets done. complained to me about the repetitiousness of the meetings during the Basel weekend. Japan. in the futile attempts to defend t he dollar and the pound in the 1960s. The inner club is made up of the half dozen or so powerful central bankers who f ind themselves more or less in the same monetary boat along with Pöhl are Volcker and Wallich from the Fed. since the Swiss National Bank is privately owned (the only central bank that is not go vernment owned) and completely autonomous. Paolo B affi. Robin Leigh-Pemberton. the remaining Europe an banks are also perceived by the inner club as extensions of their respective governments. rallied to his support. its president and a ranking governor of the BIS. was threatened with arrest. as Pöhl explained over our le isurely lunch. This occurs. tho ugh both are of course native German-speakers. preferring instead to drive in his Mercedes limousine. and the next day there is the board [which excludes the U. (I don't think many people know the n ame of the president of Switzerland . these men all share the same set of well-articulated values abou t money. Haruo Mayekawa of the Bank of Japan. but the inner club. and with Lord Richardson. They are all comfortable speaking English. But his successor.) Although the exact relationship between the Bank of Ja pan and the Japanese government purposely remains inscrutable. to a lesser degree. Mayekawa.. its then governor. having shared similar experiences.
They lack the judgement of centra l bankers. It was clearly an emergency for the inner club. and 25 percent of the entire banking system's ready funds might be frozen. For example. whether that of Lord Keynes or Milton Friedman. began a panic in the market.A second and closely related belief of the inner club is that politicians should not be trusted to decide the fate of the international monetary system. But in less than forty-eight hours. U.to pay the interest on its $80 billion external debt. Half came directly from the United States . and considerable re lief when he was reappointed for another term. when the ground floor of the BIS headquarters is open t o official visitors. Each night it had to borrow more money to repay the interest on the previous nights transacti ons. For this reason.at least in the financial press . After speaking to Miguel Mancera .5 billion to Mexico to relieve the pressure on its long-te rm debt. the inner club quietly decided to extend the deadline instead of collecting the money from guarantors. THE FINAL AND by far the most important belief of the inner club is the convicti on that when the bell tolls for any single central bank it tolls for them all. W hen Mexico faced bankruptcy last year. And Mexico needed an immediate fix of $1. the stability of the entire banking system. Rather than resorting to rhetoric and invoking principles.85 billion to get out of the interbank mark et. Treasury undersecretary Fred Deming had been in Basel and stopped in at the bank . Volcker immediately called Leutwiler. speculating that the U. Leutwi ler said. Leutwiler explaine d.S. as these overnight loans between banks are called. there was considerable apprehension last spring that Paul Volcker would be replaced by a supply-side ideologue like Beryl Sprinkel. he told me. I have no use for politicians. Leutwiler realized that th e entire system was confronted by a financial time bomb even though the IMF was prepared to extend $4. and. When word got around that an American Treasury official was at the BIS. who was vacationing in the Swiss mountain village of Grison.as every bank recognized by the Fed is permi tted to do . Except for the annual meeting in June (called the Jamboree by the staff). While this $1. To be fra nk. He recalled that in 1968. When Le utwiler became president of the BIS in 1982. as Dini put it. the issue for the inner clu b was not the welfare of that country but. he insisted that no government offi cial be allowed to visit during a Basel weekend. Swiss National B
.S.to have co me from the BIS.$600 million from the Treasu ry's exchange-equalization fund and $325 million from the Fed's coffers. according to Dini. when Brazil failed to pay back on time a B IS loan that was guaranteed by the central banks. The Fed was caught in a dilemma if it suddenly stepped in and forbade Mexico fro m further using the interbank market. The inner-club members also share a strong preference for pragmatism and flexibi lity over any ideology. But if the Fed permitted Mexico to continue borrowing in New Yo rk. it would require months of paperwork to get approval for the loan. by August Mexico had borrowed nearly one quarter of all the Fed Funds. This effectively sums up the common antipathy of the inner club towar d government muddling. the rem aining $925 million mainly from the deposits of the Bundesbank. We are constantly engaged in a balancing act . bullion traders.without a safety net. earlier this year.85 billion appeared . For months Mexico had been borrowing overnight funds from the interbank market in New York . Leutwile r had called the members of the inner club and arranged the temporary bridging l oan. the inner club seeks any remedy that will relieve a cr isis. director of the Banco de Mexico. Mexico would be unable to repay its enormo us debt the next day. forcing the Fed to expand drastically the supply of money. virtually all the funds came from the central banks in the inne r club. as Pöhl puts it. in a matter of months it would suck in most of the interbank funds. was about to sell its gold. which Mancera had agreed to do. Leutwiler has tried to enforce his rule strictly. for instance.
. Financial World Magazine .hanging like so m any swords of Damocles over its sacred monetary system. 1992 summed up the character of the BIS in an article entitled Why a Global Credit Crunch Some say Little-known BIS Is Partly to Blame . though advanced pro forma by the BIS (with a token amount advanced by the BIS itself against the collateral of Mexica n gold).and pay the requisite price for the disguise.. would have had to take the political heat individually for what app eared to be the rescue of an underdeveloped country.ank. inner club members publicly pay lip se rvice to the ideal of preserving the character of the BIS and not turning it int o a lender of last resort for the world at large. Chile.Despit e its global anonymity. But the bailout was only a temporary. In the book Global Financial Integration the End of Geography. the inner club has no ch oice. Zaire. however.rescuing the banking system itself. Brazil. Poland. they will undoubtedly continue their maneuvers to protect the banking system at whatever p oint in the world it seems most vulnerable. and Bank of Japan. they were .. author Richard F. Bank of England. To mollify such dissent on the periphery. and News From Nowhere. Others at the BIS have argued that it does not have the experience o r facilities to become a mini-IMF . Hungary. UPDATE (9 years later) Investor's Business Daily. In fact... the BIS is one of the most powerful financial institutio ns in the world ..including Argentina. This new role has created considerable concern among the outer circle. Venezuela. deposits that were speci fically guaranteed by these central banks. Privately. and even in the Bank of England. if not pyrrhic.true t o their paramount values . November 7. it is ultimately the cent ral banks' money at risk. After all. The next meeting of the inner club is Monday. but to remain a crisis manager. On August 31 of this year. and even Israel . as one s taffer described it. and to integrate and coordinate the supervision of banking. And the inner club will also keep using the BIS as its public mask . O'Brien further confirms the powerful role of the BIS In the financial marketplace.. told me. it merely provided a convenient cloak for the inner club.. May 1. Let the Fed worry about Brazil and the rest of Latin America . especia lly Volcker. since the members who don't entirely share the mentality of the inner club want the BIS to remain primarily a European institution..putting out fires around the world. Edward Jay Epstein is the author of The Rise and Fall of Diamonds. the trend towards some sort of global governance i s best represented by the efforts of bank supervisors under the aegis of the Ban k for International Settlements in Basel to impose common minimum capital requir ements on banks . t he Philippines. definitely not part of the inner clu b. not the BIS's. victory. regulations put into effec t in 1988 by the Bank of International Settlement's Committee on Banking regulat
. as Leutwiler has concluded.. Otherwise.that is not the job of the BIS. Bank of Italy. 1993 Where Has All the Money Gone explai ns how the BIS has more recently flexed its muscle Even before Japan's equity markets began to contract. He also has written a bo ok on international deception. Legend The Se cret World of Lee Harvey Oswald. Mexico repaid the BIS loan. With the multibillion-dollar debts of a sc ore of other countries . a b lunt representative of the Bank of England. securities markets and insurance . its members. The BIS undertook virtually no risk in this rescue operation.February 16. Yugoslavia.
email@example.com d.netThe Bankers Global Network by Alf MendesSee also Alfred Mendez' article AN UNCOM MON VIEW OF THE BIRTH OF AN UNCOMMON MARKET on my Bilderberg History page httpwww. to 8% to total capital. those terms are meanin gless.org The wealth of the country flees the land Like cottonseed on a wind Blown by the fetid breath Of money-pimps in Bedlam Pursuing the creed of masters Who worship a market freed Of all restraints on greed While politicians posture And feed on delusions of power The above graph [couldn't reproduce it here. without money. the title itself emphasises the role of money After all.. in any case. Switzerland.spectrezine.[Bill Clinton's mentor and Georgetown U niversity professor] bank for international settlements . This system was to be controlled in a feudalistic fashion by the central ban ks of the world acting in concert. The Bilderberg (or BB from now on) was formed in 1954 out of the need of corpora
. how is it possible to disassociate banker f rom politician from businessman when.ion and Supervisory Practices had begun to exact a particularly heavy toll on Ja panese lenders. and the fact that it focusses on banks and bankers (a profession endowed with the aura of authority in the ey es of the public) is quite simply because. Indeed. The apex of the system was to be the Bank for International Settlements in B asel.terms that have dominated politicaleco nomic terminology over the past two decades-or-so. at times. 'globalisation' would be equal ly meaningless if such politically omnipotent groups as the Bilderberg Group and the Trilateral Commission were not taken into account when assessing it's (glob alisation's) significance. one individual is all three . what is a banker if he's not a trader in money Similarly. a private bank owned and controlled by the world's central ba nks. Those regulations require the world's bankers to raise their und erlying asset bases.J Epstein bank for international settlements . nothing less th an to create a world system of financial control in private hands able to domina te the political system of each country and the economy of the world as a whole. by secret agreements arrived at in frequent m eetings and conferences. Moreover.] was created in order to bestow meaning in simplistic. Carrol Quigley. Each central bank sought to dominate its government by its ability to contro l treasury loans. see below ed. more than double the asset average of the 1980's. 'new world order' and 'globalisation' . they are constituent parts of a single entity the corporate esta blishment Hence the inclusion of these two groups withinthe graph. to influence the level of eco nomic activity in the country.Basel SwitzerlandTHE NETWORK Alfred Mendez alfred. the money against which they lend.the bankers' plan The Power of financial capitalism had [a] far reaching plan.BaselCarrol Quigley . Tragedy and Hope. and to influence co-operative politicians by subs equent rewards in the business world. delineated form to such terms as 'free market' . which were themselves private corporations. to manipulate foreign exchanges. 1966 .
initially. and (2) so little knowledge of it is in the publi c domain.te America to ensure cohesion of purpose on the part of its European partners in the recently formed North Atlantic Alliance (NATO) .not o nly because of its prestigious membership (embracing as it does the head bankers of the leading industrial nations) . inevitably gave b irth to an idealdogma exposing the socio-political discord inherent within that same system which was based on the concept of one comparatively small group of p eople garnering profit from the wealth created by the labor of a much larger gro up. to act as a for um for central bankers in the future. the wishes of many of its partners).it consisted. must be in agreement with the TRI's declaration (published in their The crisis of Democracy) that what the West nee ds most is a greater degree of moderation in democracy. and to bring Germany into t he Alliance (against. and (2 ) these conferences take place under very strict security cover supplied by the respective host countries . The BIS is the world's oldest international financial institution. Ford.a birth both induced and nurtured by corporations such as I. the Banks for International Settlements (or BIS from now on) is self-evidently of prime importance on the international scene . was henceforth 'the enemy'. for two reasons (1) its prime ranking i n the international hierarchy. having been s et up in 1930 with the twin aim of (1) coping with reparationsloans fromto a ver y unstable post-World War one Germany. having fostered the rapid growth of a capitalist economy. 'patriotism' etc. That
. b ecome synonymous with the concept of the 'nation state' . being that.G.together with the gravity and importance of the subjects discussed at these conferences (NATO.leading to the Bolshevik revolution in 1917. understandably.corporation which were fast becoming multi-nationa l in nature. and its most blatant expression was the birth of fascism in the aftermath of the Bolshevik re volution . of a group of 6 central banks and a 'financial institution of the USA'.able to circumvent all those orthodox ideals that had. In order to appreciate what followed. they shared the same aim i ncreasing globalisation of their wealth and power.. the BB with its to tal lack of any 'democratic accountability'. T hat it is a group endowed with enormous political clout can be attested to by (1 ) examination of the lists of committee members and conference attendees over th e years . the former probably thinks the 'the degree of moderation' somewht understate d! A further examination of both graph and list of bankers' names reveals that. Thus was Marxism born . Set up in 1930 (see above). secretive nature.Enter BIS. and (2) more importantly. of the banking organisations. Though. . it was the epitome of supranation ality . such circumvention of patriotism by any of its b oard members could lead to them being accused of treasonable offences. it is essential to offer a brief resumé of t he politicaleconomic situation at the turn of the century the Industrial Revolut ion.. SKF.but also because of the significance of it s links with other groups. with linked membership. at the expense of the other better-known banking institutions. on second though ts.the twin aim being to faci litate the flow of American capital into the region. Granted a co nstitution charter by Switzerland.with not-a-little-help from David Rockefeller of the ChaseManhattan Bank. This article will focus on it. The Trilateral Commission (or TRI from now on) was formed in 1973.such as 'love of count ry'. now perceived by the industrial nations as representing the very antithesis of capitalism. The 'cold war' had begun. Certainly.even though implicit within the structure of this ca bal is its unaccountable. over the years. it should be noted. in certain circumst ances (such as a state of war). Th at its projected formation should have been so enthusiastically acclaimed by the BB Conference in Knokke (Belgium) in 1972 should cause no surprise. As such.the danger. ITT and Du Pont .The USSR . Both corpor ate-controlled organisations. it was henceforth based in that country. of course.Farben. being repeatedly a key subject). its agenda de termined by the corporate-funded Brookings Institute and the Kettering Foundatio n .
V. Emil Puhl (VPres. in view of the close relationship between Amer ican and German corporations (as noted above). gold looted from the coffers of the invaded countries of Austria.via the BIS .a conference which subsequently resulted
. Mein Kampf). and by transf erring 9 billion gold francs to Algiers .th e US Administration was effectively under corporate control (as it has been sinc e 1933. and that the President of the BIS from 1939 to 1946 was Thomas McKittrick. and 11 hundred t ons of much-needed wolfram (tungsten) per month! The fact that this trade was il legal in the USA for much of this period .G. of the Bank of England) were Nazi sympathisers. By concluding a pact with Hitler. With the above noted disclosures in mind.often via fascist Spain . payments and investments . and years later corr oborated by a BBC Timewatch film Banking With Hitler (broadcast in late '98).as now .Chm. Given the membership of the BIS at that time. from the former to the latter. was a shareholder in ICI. Henry Morg enthau. many . during FDR's term of office).erica was supplying Germany with 48 thousand tons of oil.the Germans and their Fr ench subsidiaries made a killing of some $175 million in this dollar-exchange sc am. Yoneji Yamamoto. In the late '30's. Even the Secretary of Treasury. Czec hoslovakia.Farben). Harry Dexter White. It should be added that. And not surprisingly. a substantial portion of supplies went to Germany . given America's gre at wealth . the fact that they shared his endemic anti-communism blinded them to the risk that they were running by negotiating from a position of comparative military weaknes s . aware as they well were of the pa rt played by BIS in this.did little to stop such trade. His continued presidency of the BIS after America's entry i nto the war in December1941 was approved by Germany and Italy with this signific ant addendum to their note of authorisation McKittrick's opinions are safely kno wn to us. (a company which had made subst antial loans to the Third Reich) and Chairman of the British-American Chamber of Commerce in London. Tw o examples of such bias (there were many more) were (1) The BIS had arranged tra nsfers into the account of the German's Reichbank of $378 million of what was. who immediately contacted his German colleague in the BIS.and for which they paid a heavy price. and Dr. Dr. i n effect. Many of the financial arrangements covering such trade were handled b y BIS in neutral Basle.in effect . of the non-Axis members on the board. In July '44. Azzolini (Gov.g ave him the green light to advance eastwards (ref. which had ties with I. then . On the board were the following high-profile representatives of the Axis powers (t here were 4 others) Walther Funk (Pres.it was inevitable that the trade between the two would be of a one-way nature.of which Hitler was perfectly aware . and his Assistant. and (2) in the summer of 1942. saw to that. The large corpor ations. SS Grup penfuehrer Baron Kurt von Schroder (of the Stein Bank of Cologne).Farben. Higginson & Co. plans for the pr ojected American invasion of Algeria were leaked to the governor of the French N ational Bank. Holland and Belgium. the policy of appeasement pursued by B ritain and France towards Germany in the pre-war period can now be more readily understood. such as Standard Oil and ITT. 730 delegates f rom 44 countries met at Bretton Woods to plan a framework for post-war internati onal trade. of the Reic hbank).by ship and tanker under flags of n eutrality.G. As an example of how substantial this trade was in mid-' 44 Am. Britain and France . and more particularly during World War 2. of the Reichbank). Hermann Schmitz (Jt. By the late 1930's the BIS had assumed an openly pro-Nazi bias . After all. McGarrah (ex-Chase National Bank & Federal Reserve Bank).as opposed to Europe's straitened circumstances . of I. Bank of Italy). Prime Mi nister Chamberlain. Kurt von Schroder (ab ove). could do little about it. Furthermore. It should also be added that the architect of this act of appeasement. this was hardly surprising. an American corporate lawyer wh o had been both Director of Lee.such as Montagu Norman (Gov.and particularly after America's entr y into the war in December '41 .America was by then a financial force to be reckoned with on the international scene is borne out by the fact that the first President appointed to the BIS was Gates W.much of it disc losed by Charles Higham in his book Trading With the Enemy.
it had seen to all such previous attempts. calling for the dissolution of BIS. the BIS was the institution chosen by the EPU to oversee this movement o f capital (a point worthy of note here is that the head of the EPU at that time
. the BI S has adopted a low profile and remained uncommunicative. the quota s which made up its capital amounted to 10% of the total world imports.for two reasons (1) it thus eluded any investig ation into its previous financial dealings with the Third Reich. whose primary aim in the aftermath of World War 2 was to ensure the unrestricted flow of American capital into Europe. This aim was furthered by means of the US Congressionally-authorised European Cooper ation Act (ECA) of 1948. The app arent inviolability of the BIS referred to above was perhaps best illustrated by the fact that Resolution 5. the board members of BIS. In view of the somewhat puzzling fact that this now meant that there were in thi s post-war period three international financialbanking institutions . but by ' 76 they made up only 4%. BIS's method of achievi ng this was by stressing its somewhat euphemistic neutrality. but that circumstances have cause d a further decline in the volume of its business. but quintessential supranationality.remaining three-quarters financed by banks (commercia l).stated It is noted that the Bank has continued to supply the principles of strict neutrality. close look is called for in order to clarify the situation.. the term 'irony' hardly does justice to t he above statements!. thus allowing the BIS more latitude to follow the agenda set by the corporate establishment . the last to be signed by it s President. for the IMF now controlled much less of the world's money. the Rockefellers . and therefore politically less manageable by the corporate establishment. whereas the IMF and The World Bank have been frequently and conspicuously in the public eye from birth. they owed the ir survival.both under the aegis of the Marshall Plan of 1947. Their annual report of 1946 . Predi ctably. in which both NATO and the Bilderberg played a crucial role. (Today. between them. In view of their recent previous history.as quoted in the Times . control 95% of the money in circulation).accountable to a much wider constituency than the BIS. Thomas McKittrick in June 1946 he was appointedViceChairman of the Chase National Bank by its owners.in the setting up in'47 of both the International Bank for Reconstruction & Deve lopment (IBRD. was subsequentl y ignored and proven ineffective. The corporate establishment had seen to that as indeed. were therefore . it must be recalled. the European Payment s Union (EPU) of 1950 .to whom.ostensibly .presumably as a mark of gr atitude for the assistance rendered to them by the BIS during his presidency. The firs t (and intriguing) fact to be noted here is that. and (2) more im portantly. The reason for this apparent ta king over of such responsibility by the BIS from the IMFWorld Bank is twofold (1 ) the collapse of the Bretton Woods system of exchange convertibility in the ear ly seventies exposed the irrelevance of the latter as agents for European recons truction. the latter wo uld henceforth be widely (though erroneously) regarded as the sole guardians of the worldwide economy.. This ambivalent relationship between the IMFWorld Bank vis-a-vis the BIScommerci al banks in the 70's is epitomised by Anthony Sampson in his book The Money Lend ers The commercial banks in the meantime had created a very different perspectiv e. or World Bank) and the International Monetary Fund (IMF). by so diassociating itself from the IMF and World Bank.a brief. incidentally. A flow considerably eased by subsequent Europea n integration. and the first condition for enjoying the benefits o f an ordinary monetary system is to establish and maintain a reign of peace. In 1966.by '76 world annual deficits had reached $75 billion of this. Further Wars are the worst ca use of monetary convulsions. and implemented by its subsidiary. This report was. while playing down its less palatable. 18% by other official international bodies (gov ernments and World Bank) .all with t he self-evidently similar aim of resolving the world's serious economic problems . With war's end now calling for a clearing of conscience. and (2) the latter being statutorily-appointed agents of the UN. This was an expedient tactic for the latter to adopt . 7% financed by the IMF. some two-and-a-half decades later.
in the aftermath of World War 2. the Committee on Payment and Settlement Systems and its various working parties. and Germany's subseque nt conduct vis-a-vis European integration must be viewed with this in mind. over time. and provides the secretariat for. (F) .was one Richard Bissell. The G-10 meet ings have. hosted by the BIS in their high-rise offic e block in Basle). the secretariat for which is provided by the BIS. above all because the Governors of the G-10 central b anks meet regularly on the occasion of the Basle monthly meetings.plus the central bank Governors of Canada. they (the Ameri cans) set up the Bundesbank in Frankfurt (in their zone of control). the B IS states that its predominant tasks are summed up most succintly in part of Art icle 3 of its original Statutes. a bureaucratic politico-economic body occupying a position of crucial importance within the wider global hierarchy envisaged by the corporate establishment. It aly. The significance of the American's key central role in this sequence of events i s underscored by the fact that.the BIS in a joint initiative with the Basle Committee on Banking Supervis ion is establishing an Institute for Financial Stability ahich is expected to co
. They are 'to promote the co-operation of centra l banks and to provide additional facilities for international financial operati ons'.The BIS w as now firmly ensconced in the heart of European integration. In their published précis entitled Profile of an International Organisation. (C) As early as 1971 concern among central banks about the evolution of the Euro currency markets led to the establishment of a Standing Committee of the Group o f Ten central banks which has met periodically in Basle ever since (D) In December 1994 the G-10 Governors set up The Basle Committee on Banking Su pervision. (Meetings. an economist who. (E) The BIS hosts meeting of. Japan.in effect. was to be the CIA Deputy Director of Planning overseeing the Bay of Pigs fiasco in April '61!). each of whom appoints another member of the same nation ality .. pertinent quotes from which follow (italics are BIS 's) (A) Since September 1994. the eleven countries from which the members of the Ban k's Board of Directors are drawn have been identical with the countries which co mprise the Group of Ten (G-10). Germany. France. with which the BIS has had a long and close asso ciation. the UK and the USA. and was subsequent ly to play a critical role in the events leading to its (Europe's) eventual evol vement into the European Union. the BIS has been a par ticipant in G-10 Meetings.Holland. (2) A Management Board. become the pivotal forum in which much wider activities ha ve been set in motion by the G-10 central banks in the pursuit of financial stab ility. In a ny case. ensuring th at the bank would be independent of government and follow a strict monetary poli cy . comprising the Governors of the central banks of Belgium. and (3) An annual General Meetin g in June of each year. the fact remains that Germany's subsequent frequent delaying tactics en abled the dollar to consolidate its dominance. years later. been a principal forum for discuss ion of international monetary questions. it should be noted. (B) As well as making resources available to the IMF under the GAB (General Arra ngements to Borrow) the G-10 has. To achieve this aim it has 3 administrative bodies (1) a Board of Director s. That this is an organisation carrying enormous clout is readily confirmed by a c loser look at said synopsis. From the outset. another Federal Reserve System. since 1963. In 1948 they replaced the existi ng Reichmarks with approximately 11 billion Deutschmarks. Sweden and Swi tzerland a total of 17.
The European Central Bank that will manage the euro is a truly supranational institution. whose aim is to monitor global markets (t his was the idea of Hans Tietmeyer. From 1st of June 1973 until the end of 1993 the Secretariat of the Committee of Governors also served the Board of G overnors of the European Monetary Co-operation Fund (EMCF) and the Bank (BIS) ac ted as EMCF agent. The signs are there for all to see Is America really in the Gulf Region for t he benefit of its inhabitants ('ragheads' in American parlance) Ask any oilman. President of the Bundesbank). inasmuch as inherent within the capitali st system is its obligation to the aggrandisement of profit.Fred Bergsten. Are the two terms 'NATO' and the International Community' really synonymous Ask any country not in the Alliance..said he did not foresee the ENI.The EMI would enab le the BIS to re-focus on global issues.. Certain conclusions can be drawn from a recapitulation of the facts noted above (1) The BIS occupies a central role within the globalEuropean financial scene to the extent that such institutions as the G-10 and ECB (among others) play a s urrogate role.and the decision by Germany and Fr ance to give up their mark and franc . sovereignty .mmence its activities sometime in the second half of this year (1998). As reported in the Times of 1011'93 Andrew Crockett (Executive Director of the Bank of England ). Money traditionally has been an integral element of national sovereignty.in the sense of a country's or organisation' s political independence . (It should be added that the above quotes are by no means a comprehensive listin g in the synopsis of the BIS's activities on the global scene). the Committee of Governors and the EMCF were the Community b odies which provided the institutional framework for monetary co-operation in th e European Community. This is inevitable.forerunner of the European Central Bank (ECB).. (3) In the Independent On Sunday of the 21st February '99 it was reported that A ndrew Crockett (see above) has been appointed Chairman of a newly-established 'S tability Forum' (see quote 'F' above). and develop its role as a forum for col laboration between central banks in the monetary and regulatory fields.can be ignored and overridden. (2) The goal of the corporations is precisely the same today as it was at the en d of the Great War.and adding that. (G) From 1964 until the end of 1993 the BIS hosted the Secretariat of the Commi ttee of Governors of the Central Banks of the Member States of the European Econ omic Community (theCommittee of Governors). Is the 'Cold War' really dead Ask NATO why it is still in existence. Three news items concerning the role played by the BIS are worthy of note (1) In 1994 the Belgian banker. Head of the Institute for International Economics. This is happening toda y..represents the most dramatic voluntary su rrender of sovereignty in recorded history.. (2) C. told the Washington Post on the 3rd of January '99 The adoption of a common currency is by far the boldest chapter of European integration.impinging on the work of the Basle-based BIS which is widely re garded as the central banker's central bank. who was replacing Lamfalussy as General Manager of the BIS. Until they were replaced by the European Monetary Institute o n 1st January 1994..
.. Baron Alexandre Lamfalussy resigned from his pos t as General Manager of the BIS in order to become Head of the European Monetary Institute (EMI) . (3) As a consequence.
'45 to '95 (Rou tledge '96) HIGHAM. The seat of first world finance capital is Basel.) Alfred Mendez alfred.and an Adobe Acrobat file .mendes@virgin. Several of these trans-Atlantic money and commodity cartels financed Mussolini a nd Hitler and actively maintained their connections with the Reich throughout Wo rld War II. Che micalManufacturers-Hannover. . Citibank. Alfred Mendez' Bankers' Network chart proved impossible to transfer to a web pag e so it is available here as a Microsoft Word 6 file . It is just one more example of the wise investment policy of cartels like J.Is it not clear that NATO's primary role in Europe a's anti-Marxist enforcer (even though the Marxism y nominal nature) Ask the head formulator of NATO.bankers and businessmen have been trading with the enemy for centuries. Texaco. This pattern holds true of Central Banks through out the nations of the advanced capitalist sector.S. why is so little of the BIS in the public domain Ask the ownerscont rollers of the means of communication . Martin The Origins & Development of the European Union . the owners of the Class A stock of the NewYork Federal Reserve Bank. It is the exclusive property of Wall Street and European prime banks. Charles Trading With The Enemy (Robert Hale '83) MARSHALL.America. Anthony The Money Lenders (Hodder & Stoughton '81) BIS Précis '98 INTERNET (Membership lists. Guaranty Trust. are Chase-Manhattan. Matt The Bank (Random House '99) SAMPSON. None of this is really secret-anyone c an discover the facts by doing a little research. and Standard Oil of California (SOCAL).org Mark Evans . where the Central Banks of the Group of Seven (G-7) form the directorate of the Bank for Internat
. BIBLIOGRAPHY DAVIES. The Big Five have interlockin g directorates with the Seven Sisters. Gulf. etc.the media. The Class A stock of the Federa l Reserve has not been sold or traded on the open market since it was hermetical ly sealed from the public at the end of the summer of 1914. Morg an and Co. Nor should it be considered a conspiracy (either by those who promote or deny the essential facts of the matte r) . Mobil. BP (British Petroleum). Dutch-Royal Shell.P.
is to act as corporate Americ in question may be of a purel George Kennan (he may be dead birth is on record in the BBC
Has not the UN's sovereignty been by-passed time-and-time again over the years A sk its main debtor .B. Global Financial Centre . and Standard Oil of New Jersey. the Anglo-Dutch-American oil cartels Exxo n.I. Glyn A History of Money (University of Wales '94) DEDMAN.so you can print it out. and Bankers' Trust.Global Financial Institutions The big five prime banks of Wall Street. but his disclosure of the real reason for NATO's 's Lord Reith Lecture of 1957).net httpwww.spectrezine. And finally. Switzerland. They were also all actively involved in Stalin's Russia by the begin ning of the first Five Year Plan in 1928. whose major stockholders are t he trans-Atlantic Ruling Class.a Rich Text file .
New Hampshire. Holland. also headquartered in Ge neva. the last head. Treasury Securities through the operations of the Federal Open Market Committee . imposing austerity terms upon their in ternal economies.ional Settlements (BIS). Germany. the United States. nativist fascist movements are being pumped up all around t he globe and the aggregate Debt is approaching the net worth of all the real est ate and movables on the planet. was founded i n 1946. Italy. requiring that they purchase specified am ounts of the currency of the G-7 nations. and Japan) have p urchased the U. These are channeled through the General Agreement on Tariffs and Trade (GATT) to the multinational cartels. The G-7 are called the Hard Currency Countries because th eir Central banks. and Russia are joining their military and space programs. extending credit in the form of Special Drawing Rights (SDRs) to the Second and Third World debtor nations.S. 95% have been floated since the end of World War II to finance the Cold War against the Evil Empire. Now Communism has been d eflated as an enemy. T he capital pool of the IMF consists of the Prime Banks of the First World. much as the IRS functions as the collection agency for the Federal Reserve Bank. owing to its debtor status. under the Berg hoff. as a Keynesian paper cr edit-mill. The World BankInternational Monetary Fund (IMF). The World Central Bankers' Bank The Bank for International Settlements (BIS). Now. The IMF functions under the aegis of the United Nations. France. and ingotted gold of the world.S. Holland. and Sweden. The Wall St reet branch of the Federal Reserve is the fiscal agent for the IMF in the USA. The G-7 include Britain. also. milled. With the implementation of NAFTA and the Uruguay Round of GATT. engaging disproportionately in UN Security Council police actions around the globe. The last Superpower. is not the prim ary head of the G-7 Beast. it functions as a clearing house for the balance of payments between nations. It operated throughout WWII as an interlocking directorate and a clearinghouse f or joint Allied and Axis high finance. Ap proximately 80 percent of this is in the vaults of Credit Suisse.S. the U. the U.. will be leveled in time to near pari ty with the Third World. Of these U. having gone global. is becoming by degrees a full-blown total itarian state. International Capital.S. was founded in 19 30 and was the first entity to be called a World Bank.S. has become the greatest debtor nation on earth because the Prime Banks of the other nations of the G-10 (especially Britain.S. Switzerland. and Japan. and the bankers are beginning to foreclose upon the bankrupted mi nions and dupes within their new global condominium. will increasingly employ the blue-hel meted troops of the UN to enforce the hegemony of Capital in the future. The U. ap propriately close to the horned tail. during the war in 1 944. the real wages o f blue and white collar workers in the U. called the G-10. Monetarist and gold-based . Canada . government debt in the form of semi-annual and tax-exempt U. The IMF functions as the collection agency for the World Bank. but is. the first beast. the U. inclu des Belgium. Mark Evans North Coast HOME
.S. the airport in Zurich. A somewhat larger formation. have acquired most of the mined. corporations privately owned by the Prime Banks of these nati ons. the Second Beast. after being drafted at Bretton Woods. and looting them by means of repayment schedules of their natu ral resources and minerals.S. Treasury Securities. the Fed's window on Wall Street. which interlock with the First World (G-7) military-industrial complexes and the oil conglomerates.
Rome. Tokyo. Jürgen Stark or Stefan Schönberg. Ottawa. Paris. London (Vice-Chairman) Vincenzo Desario. Jean-Pierre Patat or Marc-Olivier Strauss-Kahn. Brussels. Frankfurt am Main. Ernst Welteke. Frankfurt am Main Senior Officials Andrew Crockett. Paris. Deputy General Manager Gunter D Baer. David Dodge. Head of Department
. Washington. Washington. Stockholm (Chairman of the Board of Directors. Frankfurt am Main Alternates Bruno Bianchi or Stefano Lo Faso. Rome. Alan Greenspan. Amsterdam. Zürich. Paris. General Manager André Icard. New York. Peter Praet or Jan Smets.July 2001 Board of Directors Urban Bäckström. London. Jean-Claude Trichet. Hervé Hannoun. Brussels. Alfons Vicomte Verplaetse. Roger W Ferguson or Karen H Johnson. Jean-Pierre Roth. Rome. Ian Plenderleith or Clifford Smout. President of the Ban k) Lord Kingsdown.Electrons to the Editor bank of international settlementsBIS .Board and Senior Officials . Brussels. Masaru Hayami. Antonio Fazio. London. William J McDonough. Sir Edward A J George. Nout H E M Wellink. Guy Quaden. Secretary General. Hans Tietmeyer.
and who had powerful Wall Street connections. Japanese. This polished Ameri can gentleman sat down with his German.Italian politician Lamberto Dini . including the Federal Reserve Bank of New York. part of whose early upbringing was in Brooklyn. American president of the Nazi-contro lled Bank for International Settlements in Basle. spectacle frames. Manager. Economic Adviser. concurred in by the respective governments. the R
. Thomas Harrington McKittrick. closure or censure. Sensing Adolf Hitler's lust for war and conquest. while young Americans were dying on the Italian beachheads. Gold that had been looted from the national banks of Austria. Chairman. Switzerland. Dr. These owners included the Morgan-affiliated First National Bank of New York (among whose dire ctors were Harold S. Deputy Secretary General Josef ToÆovský.A Bank for All Reasons From 'Trading With The Enemy. Schacht.ISBN 0 7090 10230 [there are some minor typographical errors in this transcription] On a bright May morning in 1944. Manager Günter Pleines.By Charles Higham . Head of Banking Department Renato Filosa. cigarette cases and lighte rs. Its existence was inspired by Hjalmar Horace Greeley Schacht. who continued under the regime of Schacht's successor. pushed for an institution that would retain channe ls of communication and collusion between the world's financial leaders even in the event of an international conflict.BIS 1993 . Financial Stability Institute Representative Office for Asia and the Pacific George Pickering. the Bank of England. Nazi Minister of Economics and p resident of the Reichsbank. Robert Hale. British. It was written into the Bank's charter. General Counsel. even before Hitler ro se to power in the Reichstag. whether or not its owners were at war. Head of Monetary and Economic Department Robert D Sleeper.now Tommaso Padoa-Schioppa . that the BIS should be immune from s eizure. Belgium. and Czechoslovakia. He was seconded by the all important b anker Emil Puhl. and wedding rings of the murdered Jews. Italian. Vanderbilt and Wendell Willkie). The Bank for International Settlements was a joint creation in 1930 of the world 's central banks.198 3 . London .board of directors BIS Antonino Occhiuto Italian central banker . How the Allied multinationals supplied Nazi German y throughout World War Two' .pub. and American executive staff to discuss such important matters as the $378 million in gold t hat had been sent to the Bank by the Nazi government after Pearl Harbor for use by its leaders after the war. Chief Representative Others Carlo Azeglio Caiampi . or melted down from the Reichs bank holding of the teeth fillings.William R White. arrived at his of fice to preside over a fourth annual meeting in time of war. Deputy Head of Banking Department Peter Dittus.Italian politician and banker .now Chapter 1 .Italian central banker . Holland.BIS 1975 . Monetary and Economic Department Mario Giovanoli. Walt her Funk.
Yves Breart de Boisange r was the ruthlessly ambitious governor of the Bank of France. the BIS's o stensible purpose was to provide the Allies with reparations to be paid by Germa ny for World War I. He became obsessed with farming and. and. Vincenzo Azzo lini was the accomplished governor of the Bank of Italy. with a balding high-domed head. Morgenthau remained rooted in his property. McGarr ah. These last two fig ures were Hitler's personal appointees to the board. Eleanor Roose velt. head of the J. Morgentha u was the son of Woodrow Wilson's ambassador to Turkey in World War I. he appointed Morgenthau chairman of th e Agricultural Advisory Commission. Other directors of the Bank added to the powerful financial group. It was to be a money funnel for American and British funds to flow in to Hitler's coffers and to help Hitler build up his machine. Henry. Emil Puhl. Life is getting slow around here. pince-nez. Fr aser had little or no background in finance or economics. Gates W. but he had numerous co ntacts in high business circles and a passionate dedication to the world of mone y that acknowledged no loyalties or frontiers. A mong the directors under Thomas H. In the early 1920s he published a newspaper called The A merican Agriculturist that pushed for government credits for farmers.S. While Roosevelt soared in the political stratosphere. Secretary of the Treasury Henry Morgenthau. where he became Franklin D. of course. he continued to exercise a subtle influence over the BIS's activities that continued until the 1940s. probing eyes. the Bank of Italy. formerly of the Chase National Bank and the Federal Reserve Bank. Young's so-called Young Plan. in 1913. The BIS was completely under Hitler's control by the outbreak of World War II. Alexandre Galopin of the Belgian banking fraternity was to be murdered in 1944 by the Underground as a Nazi collaborator. in the Hudson Valley. Walther Funk of the Reichsbank. a deliberate. Baron Kurt von Schroder. a high-pitched. When Roose velt became governor of New York in 1928. and performer in drag in stage comedies. straw-hat company director. The Bank soon turned out to be the instrument of an opposite function. Stein Bank of Cologne and a leading officer and financier of the Gestapo. His successor was the forty-three-year-old Leon Fraser. at the age of twenty-two. Legend has it that on a freezing winter day in 1933. Estab lished under the Morgan banker Owen D. who retire d in 1933. a colorful fo rmer newspaper reporter on the muckraking NewYork World. FDR and Morgenthau met and talked on the borderline of their two farms. head of the c olossal Nazi industrial trust I. When he took over the position of president of the First National Bank at its Manhattan headquarters in 1935. slow-speaking Jewish farmer who. Farben. McKittrick were Hermann Shmitz. his origins of w ealth. In the first two years of Hitler' s assumption of power. Close to a thou
. D r. Dutchess County. During World War I he and Roosevelt formed an intimate fri endship. Morgenthau rapidly made up in his Jeff ersonian principles and role as keeper of the public conscience. The BIS became a bête noire of U. Fraser was influential in financing the Nazis through the BIS.G. mistrusted big money and power. Morgenthau considered it his duty to expose corruption wherever he found it. thorough. and other central banks.eichsbank. A model of integrity obsessed with work.H. New York. how wou ld you like to be Secretary of the Treasury What he lacked in knowledge of economics. the Bank of France. He learne d early in life that the land was his answer to the quest for a decent life in a corrupt society. Tal l and a trifle ungainly. Elinor Morgenthau became very close to her near namesake. The BIS's first president was the smooth old Rockefeller banker. despite. small. hesitant smile. And FDR replied. intense voice. and a nervous. a street-corner soapbox orator. Rossevelt's neighbor. Morgenthau is supposed to have said to Roosevelt. borrowed money form his father to buy a thousand acres at East Fishkil l. Morgenthau showed great flair and a passiona te commitment to the cause of the sharecropper.
Very much opposed to White. but conti nued to use him over White's objections because he knew the Germans would trust Cochran and confide much in him. This was an act of great naiveté. but White was too valuable in Washington. It is unfortunate that Morgenthau did not appoint White as his representative at BIS meetings. Cochran wrote to Morgenthau. The Nazi board members forbade any discussion of the transaction at the B IS summit meetings in Basle. Morgenthau sen t the more questionable Merle Cochran to investigate the BIS. His mos t trusted aide was his Assistant Secretary. was a rabid supporter of Hitler. 1939. Vandykebearded governor of the Ba nk of England. much of the gold of Austria w as looted and packed into vaults controlled by the Bank for International Settle ments. Beyen held an anxious discussio n with BIS general manager Roger Auboin of the Bank of France. and idealistic London journalist and economist named Paul Einzig. White came form humble origins. The gold flowed into the Reichsbank under Fu nk. One day later. demanding that they yield up $48 million gold reserve that represente d the national treasure nounced that they had already shifted the gold to the BI S with instructions that it be forwarded to the Bank of England.indeed. Funk. Sh roder. He publishe d the story in the Financial News. There the matter might have been buried had it not been for a young . His timing was not good. the Czech directors asked the Dutch BIS pre sident. he was in fact simply an old-fas hioned liberal driven by his ancestral memories of Russian imperialism. Emil Puhl. the eccentric. Beyen. Cochran was on loa n to Treasury from the State Department. Talleyrand-like Ambassador William Bullitt. The story caused a sensation in London. Montagu Norma. Cochran. In March 1938. to return the gold to Basle. On March 14. Hitler followed his forces into Prague. in the special charge of Reichsbank vice-president and BIS director. Norman instantl y obliged. failed to score this outrageous act of theft.
. which he ran with benign but military precision. Day after day. The storm troops arrested the directors of the Czech National Bank and held them gunpoint. J. obtaining a clea r picture of the BIS's plans for the future. Wis consin. Einzi g held a hasty meeting with maverick Labour Member of Parliament George Strauss. and the other Germans on the BIS board. Emil Pu hl. Harry Dexter White. He was opinionated and self-confident to a degree. I have known Puhl for severa l years. Cochran spent most of his time in Basle conveying to both Morgenthau and Cordell Hull details of what the BIS was up. keen-faced man fought to help his father's hardware business succeed. Cochran became Secretary of the American Embassy in Paris. he was the child of penniless Ru ssian immigrant parents who were consumed with a hatred of the czarist regime. Unlike Morgentha u. Instead. violently so. and he is a veteran and efficient officer. who had bee n tipped off to the transaction by a contact at the Bank of England. who liked to travel the world disguised as Professor Skinner in a black opera cloak. W hite's early life was a struggle this short.W. very brigh t. finally forging as an economist wi th the aid of a Harvard scholarship and a professorship at Lawrence College. as his various memoranda made clear. he represented the State Department's s ophisticated neutralism before (and during) the war. Morge nthau took Cochran's political judgements with a degree of skepticism. He also praised Walther Funk . energetic. in his memoranda to Morgenthau. when the Nazis marched into Vienna. On orders from their German captors. Although he was frequ ently accused of being a communist sympathizer. The gold flowed into Berlin for use in buying essential strategic mat erials toward a future war. working directly under Roosevelt's friend the du plicitous. The result was th at Beyen called London and instructed Norman to return the gold.Cochran was sympa thetic with the BIS and to the Nazis. He was aided by an able staff.sand volumes of his official diaries in the Roosevelt Memorial Library at Hyde P ark give a vivid portrait of his inspired conducting of his high office. Jewish also. Cochran lunched with Schmitz.
Once again. It is true. On May 31. The arrangement between the BIS an its member banks was that transac tions were not normally made by shipments would show up counts. British Chancellor of the Exchequer. Sir John said icily o n the transatlantic wire. we've been doing business by telephone over here for almost forty year! Sir John Simon continued to dodge Morgenthau's questions. all Montag u Norman had to do was to authorize Beven and replace the same amount from the C zech National Bank holdings in London. Chamberlain was a major shareholder in Imperial Chemical Industries. Beyen said smoothly. During World War II. Sir John. He wrote an apology to Beyen in his book of memoirs. On May 15.W. Cochran wrote. He called Strauss with the news. get together on a fishing trip with President Roosevelt or to the World's Fair. But Strakosch finally cracked and admitted that Simon had discussed the transf er of the Czech gold. overcome their various prides and complexes. He was convinced that Norman had transferred the money illegally in collusion with Sir John Simon.G. Morgenthau demanded to know more. Merle Cochran ha d telegraphed him with a characteristic whitewash of the BIS and an outright dis missal of Einzig's charges that the BIS was a Nazi outfit. Secretary. Strauss put a further ques tion to Sir John Simon in a debate on May 26. The wish was expresse d by some of them that their respective statesmen might quit hurling invectives at each other. a prominent political figure. on a Sunday night in an effort to determine what was going on. Str akosch refused to disclose the details of the conversation he had had with Simon . and these reunions are enjoyable as well as profitable to them. Einzig was amazed. Well. Next day. Einzig was jubilant. The truth was that the gold had not had to leave London in order to be available in Berlin. Thus. most of the central banker s have known each other for many years. George Stra uss asked Prime Minister Neville Chamberlain. Einzing tackled Sir Henry Strakosch. It is not our custom to do business by telephone. who had never forgotten the Czech gold affair. We are enjoying our dinner. ran into J. the Prime Ministe r replied. Chambe rlain's reply threw the Commons into an uproar Einzig refused to let go. Mr. In the Center of the Things. Simon. Associated Press reported from Switzerland that transactions were completed between the BIS and the Bank of England and the Czech gold was now firmly in Berlin. The gold never left London. Farben whose Hermann Shcmitz was on the board of the BIS. Winston Churchill was the leader of a violent onslaught on the unfortunate Chancellor of the Exchequer. in answer to a question from Strauss. that the nation t reasure of Czechoslovakia is being given to Germany It is not. Cochran's letter from Basle dated May 9 and re ceived May 17 brushed over the issue once more. Simon hedged. It is all technical.
. This picture of good cheer scarcely convinced Morgenthau. Morgenthau replied. and enter into a moo d that would make comparatively simple the solution of many of the present polit ical problems. Beyen in London and asked him if he would now admit what had taken pla ce. I have had talks with all of them. denied any knowledge of the matter. sir. I'm in the country. partner of I. There is an entirely cordial atmosphere at Basle. Henry Morgenthau telephoned Sir John Simon.Strauss through Einzing began investigating the matter. Einzig.
remained in office throughout the war. the BIS had invested millions in Germany. they were represented by John Foster Dulles. The Bank of Belgium's exiled representatives in New York sued the Bank of France . were popular on both sides of the Atlantic. As a result. he went to Harvard. His wife. He was fluent in German.S. to recover their gold. McKittrick traveled to Berlin and held a meeting at the Reichsban k with Kurt von Schröder of the BIS and the Gestapo. Early in 1940. But when Hitler occupied all of France in November 1942. On May 27. It infuriated Morgenthau that Britain remained a member of a Nazi-controlled financial institu tion Montagu Norman and Sir Otto Niemeyer of the Bank of England were still firm ly on the board. Fre nch and Italian. had represented I. graduating as bachelor of arts in 1911. He admitted that Britain retained an interest i n the Bank through McKittrick twenty-one months after war had broken out. represented by New York State Senator Frederic Coudert. one of whom was at Vassar and a liberal enemy of the BIS. guaranteed immunity from constraint in time of w ar . but did not insist he be withdrawn. State Senator Coudert s tepped in with the excuse that since Germany had absorbed the Bank of France. Ironically. Winant in London asking for a report on the co ntinuing relationship between the BIS and the British government. Morgenthau grew more aggravated by McKittrick and the BIS as the war in Europe c ontinued. McKittrick was a perf ect front man for The Fraternity. th at bank no longer had any power of appeal against the verdict. White-haired. pink-cheeked. with Emil Meyer of the Swiss National Bank as cha irman. where he edited the Crimson. The Supreme Court ruled in favor o f the Bank of Belgium. Sulliv an and Cromwell. He was a director of Lee. Louis. 1941. whose law firm. and the British director Sir Otto Ni emeyer. The BIS was an instrum ent of Hitler. while fully aware of the fact that he himself was still retained by the Bank of France. They discussed doing business with each other's countries if war between them should come. He claimed that only a Bank of France representative could allow the release of funds from the Federal Rese rve Bank. He pretended that contact with France was no longer possible. Marjorie. Secretary of State Cordell Hull. Niemeyer had said that the BIS. at Morgenthau's suggestion.. and chairman Montagu Norman. he wrote learned pape rs on the life and habits of seabirds. an associate of the Morgans and an able member of the Wall Street establishment. Belgian BIS director Alexandre Galopin had intercepted £228 million in gold sent by the Belgian government to the Bank of Fr ance and had shifted it to Dakar in North Africa and thence the Reichsbank and E mil Puhl. He was forced to reply upon Treasu ry Secret Service reports rather than upon Cochran for information on the BIS's doings. was still legal and intact. smooth and soft-spoken. He worked his way up to become chairman of the British-American Chamber of Commerce. the gold remained in Nazi hands. Ambassador John G. He learned that in June 1940. Born in St.By 1939. Though he spent all of his career inland. Winant had lunch with Niemeyer of the Bank He gave an approving report of the meeting on June 1. which number ed among its members several Nazi sympathizers. and his four pretty d aughters. but its continuing existence was approved by Great Britain even a fter that country went to war with Germany. Farber. Asked about the issue of
. Higgin son and Co. ordering the Bank of France to pay out from its holdings in the Federal Reserve Bank. He sai d that he was in touch with the Bank through the British Treasury and that Briti sh Censorship examined all of the mail by his own wish. Thomas Harrington McKittrick was ap pointed president of the Bank. te legraphed U. and made substantial loans to Germany. while Kurt von Schroder and E mil Puhl deposited large sums in looted gold in the Bank.G. In the middle of the Czech gold controversy.
Yes. It would not be in our best interest to sever connect ions with the Bank. German.[in the] very correct and neutral way. Chancellor of the Ex chequer Sir Kingsley Wood. However. It was not until 1944 that they discovere d Germany was receiving most of the dividends.. Most of the board's members travelled freely across frontiers throug hout the war for meetings in Paris. This country has various rights and interests in the BIS under our international trust agreements betwee n the various governments. it had a bad public press. came largely from Nazi sources. It assumed an immedi ate peace in Germany's favour and a distribution of American gold to stabilise t he currencies of the United States and Europe.. guardian of the Bank against any danger that might occur. In London. In May 1942 he challenged Sir John Simon's successor. McKittrick's opinions are s afely known to us.who had returned to Washington. George Strauss and other Labour members of Parliament insisted upon Knowing why the Bank's dividend was still being divided equally in wartime among the British .. the BIS remained listed in Rand McNally's dire ctory as Correspondent Bank for the Federal Reserve Bank in Washington. Niemeyer went on. McKittrick should stay in Switzerland because he is . 1942.. Hitler correctly suspected him of intriguing for the o verthrow of the present regime in favour of the Fraternity imprisoned him late i n the war. all of the Axis directors received the report soon afterward and the mixed executive staff of warring nations discussed it through the rest of the day. 1942. Ho wever. McKittrick gratefully arranged a loan of several million Swis s gold francs to the Nazi government of Poland and the collaborative government of Hungary. If only for the reason that a useful role in post-war settlements might la ter have an effect. In fact. on the matter. Japanese. and America banks. Rome or (though this was denied) Bas le. Ivar Rooth. almost two months after Pearl Harbour. McKittrick might want to get in touch with the American Minister in Switzerland and explain his problem to him. wrote to his frien d Merle Cochran. I hope that our friends abroad will un derstand the political necessity of committing the Germans to send a division to Finland by railway through Sweden. The dividend. When Strauss told the House of Commons on O ctober 12 that the report had delighted Hitler and Göring.about the latest general meetin g of the Bank and the luncheon at the Basle restaurant Les Trois Rois afterward. It would be of no use at this time of raise difficult legal qu estions with respect to the relationship of the various countries overrun by the Germans... M cKittrick to remain in charge of the BIS until the end of the war. Berlin. it scarcely needs adding. Labour Member of Parliament George Strauss kept hammering away at the BIS. Hjalmar Schacht spent much of the war in Geneva and Basle pulling strings be hind the scenes. the Reichsbank and t he German and Italian governments approved the orders that permitted Thomas H. On July 13. 1941. He said that it was agreed at lunch that McKittrick should soon travel to the U nited State to explain BIS's position to your American friends .. Wood replied. This was a line peddled by every German leader starting with Schacht. Rooth continued. He further admitted that the government of Great Britain was still a client of the Bank an d had accepted a dividend from it. Sir Kingsley asserted t
. Niemeyer said that he believed the British should con tinue the association for the duration as well as lend the Bank their tacit appr oval. Thomas H. Niemeyer admitted. that was due to the mishandling of the question in Parliament. From Pearl Harbour on. One document of authorisation included the significant statement. He went through the bizarre procedure of addressing an empt y room with the report to be able to say to Washington that none of the Axis dir ectors was present.. governor of the Bank of Sweden. On September 7.the Czechoslovakian gold. The report was purely Nazi in content. On February 5.. McKittrick issued the Bank's first annual report after Pearl Harbor.
S. The matter was not even considered by Congress. Another c ollaborator in the scheme was one of the Vatican's espionage group who leaked th e secret to others in the Hitler High Command. pressure was brought to bear on him to withdraw a second resolution. transferred 9 billion gold francs via the BIS to Algiers. It is clear some form of collaboration between the Nazis and the Allies exists and that appeasement still lives in time of war. Yet American money is being deposited in the Bank. Coffee objected and introduced a similar re solution in January 1944. Shröder and other German banker s. Eisenhower to invade North Africa. and the Japanese directors of the BIS. The deal was made with the collusion of Thomas H. liberal Congressman Jerry Voorhis of California entered a res olution in the House of Representatives calling for an investigation of the BIS. I think you will be interested in reading the attached copy of [it ]. However. The Nazi government has 85 millio n Swiss gold francs on deposit in the BIS. McKittri ck. angrily. and he was forced to yield. 1943. passport to provide Emil Puhl of the Reichs bank with secret intelligence on financial problems and high-level attitudes in the United States. Treasury counsel. 1943. ignoring the normal restrictions of war. On March 26. whence he with immunity with immunity from U-boats by Swedish ship to the Unit ed States. McKittrick proceeded to Lisbon . they were seeking a killing in dollar exchange. He called for the BIS to be dissolve d at the earliest possible moment. and with the heads of the Federal Reserve Bank. who gave him safe conduct. State Department representative in Vichy. Morgenthau was interested. unde rtook a remarkable journey. but he made one of his few mistakes and did nothin g. McKittrick.hat he had not seen it. Keilhau introduced a resolution at the International Monetary Conference at Bret ton Woods. Hermann Schmitz. on July 10. At the border he was met by Him mler's special police. Washington State Congressman John M. There the matter might have lain had it not been for an energetic Norwegian econ omist of part-German origin named Wilhelm Keilhau. Pierre Pucheu. Coffee pointed out that the American and British shareholders were receiving div idends from Nazi Germany and Japan and that the Germans and Japanese wre receivi ng dividends from America. New Hampshire. his old frien d and BIS predecessor. 1946. The second resoluti on called for an investigation into the books and records of the Bank during the war. He was infuriated by Washingt on's continuing refusal to break with the Bank and its acceptance of a flagrant alliance with its country's enemies. In Manhattan in April he had meetings with Leon Fraser. In the summer of 1942. Pucheu told Boisanger that plans were afoot for General Dwight D.S. In the spring of 1943. The collaborationists boosted their holdings from £350 to £525 mill ion almost overnight. He had obtained this information t hrough a friend of Robert Murphy. Anticipating German defeat.according to a statement made und er oath by Otto Abetz to American a officials on June 21. Emil Puhl. The resolution was tabled. French Cabinet member and director of the privately owned Worms Bank in Nazi-occupied Paris. 1944. The majority of the board is made up of Nazi officials. He shouted. including the reasons why an American retains the position as president of this Bank being used to further the designs and purpose of Axis powers. saying. the Nazi-American connection would
. sent up the resolution to the Henry Morgenthau on April 1. Randolph Pau l. Boisanger contacted Kurt von Schröder. had a meeting at the BIS with Yves Bréart de Boisanger. Had such an investigation taken place. U. along with their French correspondents. Strauss went on. he was issued an Italian dipl omatic visa to travel by train and auto to Rome. Then McKi ttrick travelled to Berlin on a U. Immediately. Despite the fact he was neither Italian nor diplomat and that Italy was at war with the United States.
according to Harry Dexter White. In o ther words. Edward E. He used the spurious argument that if McKittrick resigned and the Bank was declared illegal by the U nited States government.undoubtedly have been exposed. McKittrick. Dean Acheson.so she might favour the dissolution! Everyone laughed. The minutes of the meetin gs between Morgenthau. and Beyen all had sympathies that run ther. She has informed my daughter that she is against th e Bank. Morgenthau state d that Leon Fraser. who have openly opposed this dissolution. and it holds out to them a hope. Morgenthau felt that the BIS should be disbanded because to disband it would be good propaganda for the United States. Morgenthau threw back hi s head and laughed again. which shared the same chairman. Leon Fraser and some very important people like Mr. at the Mount Washington Hotel at Bretton Woods show Ac heson arguing for retention of the BIS until after the war. He said. It strengthens the position of people lik e Mr. that the same [associations] will continue [betwee n American and Germany] after the war. Bankers Winthrop Aldrich an Edward E. At least there was a degree of honesty in that. Funk.
. T hey were supported by the Dutch delegation and by J. Acheson also argued that t he Bank would help restore Germany post-war. Acheson must surely have known that the gold was already deposited for the Axis via the BIS partner. She didn't inform me. That is what Vassar does to those girls! Under pressures form Senator Tobey and form Harry Dexter White. did the British delegation. (Ned) Brown of the American delegation and the Chase and First National banks tried feebly to veto Keilhau's resolution. the former Lydia Lopokova. Acheson. 1944. the great star of the Diaghilev Ballet who had made her debut opposite Nijinsky. Winthrop Aldrich. What you're doing by your silence and inactio n is aiding and abetting the enemy. all of the gold holdings in it owned by American shareh olders would go direct to Berlin. Mabel Newcomer of Vassar said that she would not dissolve the Bank. Beyen of Holland. Morgenthau asked her cheerf ully whether McKittrick's daughter was one of her students. via a Nazi president.when the establishment of an international monetary fund would be compl eted. Dr. Morgenthau said. Dr. Leon Fraser of the First Na tional Bank of New York stood with them. She replied in the a ffirmative. That at least was true. s trongly supported by Anthony Eden and the Foreign Office. except that she wanted her father to come home. Schacht and Dr. Morgenthau said. Acheson. was a member of wealthy czarist family who influenced her husband toward delaying the BIS's dissolution and a t abling of all discussion of looted gold. At the July 18 meeting he said. the Swiss National Bank. Keynes's wife. She is very cute. despite the fact that Holland's looted gold had gone to the BIS. Newcormer replied. particularly to people l ike Dr. the distinguished economist Lord Keynes was swayed into confirming the British official opposition calling for a postponement of the Bank's dissolution until p ost-war. Tobey of New Hampshire emerges with great credit from the min utes of the meetings at the Mound Washington. sa vagely. said th at the BIS must go on as a matter of foreign policy. There were jocular moments during the discussion on July 19. So. Senator Charles W. After initial support. smoothly usin g delaying tactics as the master of compromise he was. Brown. alas. and other members of the delega tion on July 18-19. to the company in general. they would consider this as the king of thing which can go on. was firmly in Winthrop Aldrich's camp as a former Standard Oil lawyer. I think in the eyes of the Germans. in the direction of Germany. rattled. and she said [referring to an attack on the BIS in that liberal p ublication] ' I think PM is right and father is wrong'.W. She has read this article i n PM about it. the for mer president of BIS and negotiator of the Czech gold transference. representing the State Department in the American delegation. Morgenthau agreed.
The same day. Finally.. over the objections of Edward E. that what he was upset about was that he felt that the BIS should be kept going until a new world bank and an internatio nal monetary fund were set up. What about McKittrick Hull replied icily. as calmly as he could. ran up three flights of stairs and knocked on the Mo rgenthaus' door. Sir John Anderson in London. he and his wife abruptly left a British summit meeting and. Although Keynes was advanced in years and had a heart condition . Harry Dexter White sent a memorandum to Morge nthau dated March 22. Next day. who had become acutely embarrassed by press criticism. Keynes returned to his rooms and contacted his fellow delegates from the Foreign Office. After fou r years of tacitly approving the BIS. he repeated angrily to Acheso n. red-faced. sent a letter by hand to the Morgenthaus' su ite again calling for the BIS to go on for the duration. he was well regarded in Whitehall. Schimdt held a meeting with McKi ttrick in Basle. There was no mention of the millions owed by Germany to the Allies and the conquered nations. should be reminded of Bretton Wo ods' resolution Number Five. Brown and the great irritation of Dea n Acheson. and should be advised that we are not answering the letters. At midnight an exhausted Keynes said he wo uld go along with the decision. certain men who have their central bankers' point of view are in very strategic positions a nd can influence the conduct of the German Government with respect to these matt
. Lord Keynes fe lt that the BIS might be too quickly abolished if Acheson were beaten by the Mor genthau faction. 1945. McKittrick did everythin g possible to combat it. Treasury's indispensable Orvis A. one must first understand t he strength of the confidence and trust that the central bankers had had in each other and the strength of their determination to play the game squarely. one must realise that in the complicated German financial setup. Morgenthau's delegation approved the disposal of the BIS. said he would have to take the matter up with Cordell Hull. seeing that Morgenthau was under pressure to dissolve t he BIS. As such. The result of this late-night meeting was that he largely compromised h is original agreement and at 2 A. Second ly. in effect. Keynes. Keynes repeated.. Hull told Morgenthau he called for its dis solution Morgenthau telephoned him and said.Dean Acheson. fighting hard with Edward E.but only in good time. In order to understand. Brown at his side.M. Morgenthau promise d to call Hull. Let him read about it in the papers! Acheson went to see the British delegation on July 20. huge sums would have to be paid to Germany by the Allies and the BIS would have to s iphon these through. Lady Keynes also urged Morgenthau to let the Bank go on. Morgenthau insisted the BIS must go as soon as possible. Closely connected to high -level politicians in England. When Schmidt asked McKittrick the Germans had been wil ling to allow the BIS to be run as it had and had continued to make payments to the BIS.. shifted his ground and took the position that Britain was in the forefro nt of those who wanted the BIS to go. He was sure Hull would want the BIS re tained the since Hull had approved its existence up till now. His comment on McKittrick's remarks was sharp I was surprised t hat a voluntary recital intended as a defense of the BIS could be such an indict ment of that institution. Immediately after the liquidation of the BIS was voted. Let him read about it in the papers! Later. Elinor Morgenthau was astonished to see the normally imperturba ble British economist trembling. saying. and sweating with rage. they are. He stated that when the war ended. a challenge to Bretton Woods. He sent letters to Morgenthau and the Chancellor of the Exchequer. finding the elevat or jammed with conferences. McKittrick replied.The other signatories to the Bretton Woods Act should be advised of the BIS action. McKittrick's letters are part of an obvious effort to stake out a claim for the BIS in the postwar world.
he pretended that Puhl does not share the Nazi poin t of view. Czechoslovakia. Schmidt closed in. When the war is over you'll find it all carefully segregated and d ocumented. Holland. Only in Switzerland coul d we still do business through changing gold into foreign currency. from the concentration camps. He added hastily I'm sure it will be in Berlin when you get there. Funk ad mitted that Puhl was in charge of gold shipments. McKittrick continued. At the Nuremberg Trials in May 1946. I will tell you. who had just left ah ead of his arrival . you will app reciate and approve of the role that I and the BIS have played during the war. He admitted receiving the gold reserve of the Czech National Bank and the Belgian gold. Nevertheless. including the treasure of the Jews. He knew that by a technicality the BIS no longer siphoned the gold through directly but sent it to its associated earmarked account at the Swiss N ational Bank. It i s in the vaults of the Reichsbank. testified that Puhl had American connections and had bee n offered a major post at Chase in New York shortly before Pearl Harbor. and other occupied countries. I thought it would be better to take it and hold it rather than to refus e it and let the Germans Keep it for other uses. and other gold. Walther Funk. monocles. T hey were. Orvis Schmidt went on to see the executives of the Swiss National Bank. It was v ery difficult to pay [in foreign exchange] in gold .ers. in the Reichsbank. watches. But it is extremely important world does not leak out.. When you do see them at the end of the war. That they would maintain their contracts and trust with other important banking elements so that they would be in a stron ger position in the postwar period to negotiate loans for reconstruction of Germ any. McKittrick went on to say that there was a little group of financiers who had fe lt from the beginning that Germany would lose the war. that after defeat they mi ght emerge to shape Germany's destiny. cigarette cases. still li sted as a BIS director. He admitted that the Germans had sent gold to the BIS and said. they had requested a member of the Reichsbank. He knew perfectly well that i t was Puhl who had authorized the looting of Allied gold and its transferral to Switzerland and who had been talking to McKittrick the day before in Basle about that very subject. I'm so sorry I can't ask you to take a look at the books a nd records of the Bank. S chmidt raised the question of the looted gold the $378 million in gold of Belgiu m. spectacle frames.. McKittrick did not end there. to certify that each parcel of gold that they purchased had not been prised when the directors of the Swiss National Bank info rmed him that that personage was none other than Emil Puhl. When gold was offered to us. and he added. The gold was already in Switzerland. whom they regarded to be trustworthy. which ma intained its partnership in the BIS and shared the same chairman. Anything that' s been looted can be identified. This barefaced lie scarcely impressed Schmidt. McKittrick declined to name all save one of the little group. The Swiss National Bank officials told Schmidt that in order to be sure they wer e not obtaining looted gold. Funk said th at Puhl had informed him in 1942 that the Gestapo had deposited gold coins. Orvis Schmidt was not deceived by this. Jewels. never released. Evidently he realized he had said too much th at he had let slip his own role in the transaction. He asked McKittrick whether he Knew what had happened to the Belgian gold deposited in the Bank of France McKittrick replied I know where it is. taking particular care to hide the name of Kurt von Schröder. and
. he selec ted Emil Puhl. Ernst Weber. Puhl had been in ch arge of this. Puhl is holding it for return to the Belg ians after the war.. of course. Since he had to name someone.
A Bank for All Reasons From 'Trading With The Enemy. supplied by Puhl from Heinrich Him mler's resources. In 1950 he invited Emil Puhl to the Unite d States as his honoured guest. On e of the first hints of the sources of [the gold] occurred when it was noticed t hat a packet of bills was stamped with a rubber stamp. Puhl claimed that he had objected shipments as inconvenient and uncomfortable. And the Bank for International Settlements. He dismiss ed Puhl's charges that the gold was plowed into a revolving fund. signed by Puhl. a position he occupied success fully for several years after the war. There was a starkly ironical humour in this. thus laundered.
The prosecuting counsel read items from a report that included the statement. The quan tity of the dental gold became unusually great. the German Legation in Berne was buying Standard Oil for its heating and automobiles. On May to the mitted isting re for 15.p anicked. Robert Hale. that dental gold appeared. which were supplied and repaired by U. he did not add how many bars were marked for shipment to Switzerland. 'Ausch witz. Puhl had constantly hammered away at McKittrick and the Swiss National Bank in order to secure the flow of the looted gold of Europe. 1946. in November 1942. He ad that his objections were subordinated to the broader consideration of ass the SS. head of the New York chapter of the American Red Cross. the Bank for International Settleme nts was compelled to hand over a mere £4 million in looted gold to the Allies.' This occurred s ome time early in 1943. Tons of gold. General Robert C.Nazi network T ransradio. I did n ot understand. But in order to camou flage the receipt of it. was also chairman of the part. the Swiss National Bank had disguised it as payment s to the American Red Cross and the German legations in Switzerland. poured into the Swiss National Bank in tho se last months of the war. When prosecutor Thomas E. His letters to Funk from Switzerland in March 1945 were read out. Dodd said to him. as BIB shareholder. They showed his desperate and successful efforts to overcome the effe cts of the mission that month headed by Lauchlin Currie and Orvis Schmidt. and other loot at one time.' We all knew that these places were the sites of concentrations camps. An affidavit was read to Funk.a curious description. desp ite the Bretton Woods Resolutions. There was blood on thi s gold. the Swiss Nationa l Bank. would take it into its vaults. Funk unsuccessfully sought to disclaim responsibility for the scheme. wedding rings. Despite the fact that the evidence of the Puhl-McKittrick conspiracy was overwhe lming. McKittrick was given an important post by the Rockefellers and Winthrop A ldrich vice-president of the Chase National Bank. Puhl stat ed that Funk had made arrangements with Himmler to receive the gold. brutally exposed by the Bretton Woods Conference's Norwegian delegation. Faced with a f ilm showing as many as seventy-seven shipments of gold teeth. seeking to avoid direct receipt of the gold. under great pressure from Treasury. 'Lublin. had. and you knew this since 1942 Funk replied weakly.gold dentures had flowed into the Reichsbank. In 1948.198
.pub. At one stage he said that the loot was brought to the Reichsbank by mistake! His lies became so absurd that they we re laughable.because these things we the account of the Reich. They were melted down into gold bars. In October 1945 the Senate Committee on Military Affairs produced further eviden ce of Puhl's activities. Chapter 1 . As late as 1943. How the Allied multinationals supplied Nazi German y throughout World War Two' . It was in the tenth delivery. was not dissolved. Instead. Each gold bar weighed 20 kilograms . he stuck his story.By Charles Higham . was there not. all the more-and this must be emphasized. Puhl took the witness stank. London . Davis. confirming the facts. Another hint came when some items bore the stamp.S subsid iaries.the letters showed. since the Swiss National Bank had promised the American s they would not receive it. McKittrick.
This Accord is of particular interest because of Increasing Power of International Creditors over Debtors. The power of international creditors. The new BCA will effect the activities of all large in ternational banks. This. in combinatio n with the collapse of the gold standard and the original Bretton Woods structur e in 1971. These concepts are described more f ully in Sections 2 and 3.e. over debtors is increasing. especially the US currency which is the backbone of the international monetary s ystem. and will probably be adopted by more than 100 countries. International bank s affected by BCA create the bulk of the money we all use in day-to-day living. While such an Accord might seem rather obscure and irrelevant to the general pub lic. This sets bank supervision. risk-based capital and disclosure requi rements for banks operating internationally. as well as the trend for western corporations to seek financing outsi de the banking sector. This is especially true where they can exercise their powers to acces s collateral (real assets) crucial to less powerful debtors . secrecy and comple xity surrounding the operations of the international banking and monetary system s than anything else.ISBN 0 7090 10230 Unraveling the Basel Capital Accord By Smithy (e-mail smithy@mindspring. Introduction The Basel Committee on Banking Supervision (BCBS) is a committee of bank supervi sory authorities from the G10 (i. this is perhaps more a feature of the general ignorance. They meet regula rly at the Bank for International Settlements in Switzerland and are in the proc ess of putting together the international agreement known as the Basel Capital A ccord (BCA). and appropriate capital standards for. particularly those responsible for money creation in the US Dollar. Good supervision of.org Table of Contents Introduction Background to Development of Basel Capital Accord Overview of the Basel Capital Accord (BCA) Problems with the new BCA from Public Interest Perspective Trends in Bank Supervision (esp.3 .e. Such activities are increasing income and wealth gap s globally.wizardsofmoney. the wealthiest 10 nations). through IMF S tructural Adjustment Programs internationally. has lead to increasingly reckless behavior of these bank creditors. Increasing Financial Consolidation Both domestic and cross-border consolidat ion of financial services companies is continuing to escalate in the wake of glo
. Gramm-Leach-Blily) Global Financial Consolidation and Too-Big-to-Fail Risks Addressing Causes of Financial Crises Credit Creation for LowMiddle Income Groups and Predatory Lending Non-Bank Financial Institutions Need for Public Input 1. The purpose of this paper is to act as a discussion docume nt to start gathering concerns from various NGOs working on monetaryfinance syst em issues so that more comments representing public interest issues can be submi tted to the BCBS for its next comment period in 2002. powerful creditors can help curtail this recklessness. and through predatory lending and foreclosures domestically.g.com) from httpwww.
This is leading to the emergence of huge global financial empi res domiciled in the same G10 countries that create the hard currency. in the sub-prime market. and the general imbalance in creditordebtor relations. hedging strategies and innovative regulatory avoidance have created whole new worlds of complex financi al instruments. banking and brokerage operations all merge together. This further increases the powers of large weste rn creditors over sovereign nations. low income credit access. this is reflected exte nsively throughout the new BCA with the development that sophisticated banking o perations will be able to set their own capital requirements to a very large ext ent. the new u mbrella supervisor of financial conglomerates. Most other cou ntries employ a fully separate government body for this regulatory role and one under democratic control. The new BCA comes at a time of significant changes in the supervision of large banking operations. Risk-based capital can be used to prevent crises by forcing inter national creditors to take more responsibility for the risks they assume and thi s will help prevent the need for severe cures. Moral Hazard Created by the IMF. This strange move in the US could have significant wor ldwide impacts. the bigger a financial corporation becomes the more it becomes too-big-to. In one sense strong risk-based capital re quirements can provide an antidote to the increasing moral hazard created by the IMF bailouts. It forms a capital charge on bank ing institutions. This may be the first step toward self-supervision of banks. we have seen insurance. dominate institutions such as the IMF and set the rules for international banking. A charge on the banking sector is most crucial becau se they are the most likely to get bailouts. the central bank of the United States.
. which is espec ially dangerous as too-big-to-fail risks and dependence on IMF cures increase. to regulate them. b ank supervision trends. In the Western nations. Domestic Predatory Lending and Credit Access for LowMiddle Income Within the US.bal financial deregulation and the collapse of banks in various countries after financial crises. Convergence of financial pla yers. These issues are not presently addressed at all in the existing BCA. The larger international banks affected by BCA also seem to be the primary beneficiaries of the IMF bailouts associated wit h many recent financial crises. In the following sections I wish to unravel some of the main features of the Bas el Capital Accord and highlight what I perceive as some of the issues that the g eneral public should be concerned about. IMF bailouts. In doing so I will attempt to relate th e significance of BCA to these above-mentioned issues of global finance sector d eregulation. This made the Federal Reserve. IMF bailouts are the insurance provided by the g eneral public if the risk-management strategies of large creditors (including th e holding of risk-based capital) fail. in fact. Increasing Complexity of Financial Instruments. As we shall see.fail. Bank capital requirements should address such exploitation of the poor. for their collapse could collapse th e entire global financial system. One of the last countries to jump on this bandwagon was the United States with the Gramm-Leach-Bliley act of 1999. similar in effect to what the Tobin Tax would do to internatio nal speculators in general. This creates a tremendous moral hazard proport ional to size and global reach. The regulators themselves are admitting that this makes it incre asingly difficult to really understand what is going on at these financial congl omerates and. Big creditors at the heart of the international financial system are very likel y to get bailed out no matter what they do. Trends in Bank Supervision and Financial Convergence. The potential for conflicts of in terest arising from the driver of monetary policy for the linchpin currency also regulating and supervising large financial players are enormous. and supervision requirements in general should address the whole issue of credit access on reasonable terms for lowmiddle income groups. mergers and acquisitions. over the past decade or so. banks have been incented to assess good credit ris ks (that should get a prime rate) as sub-prime because they could charge a highe r interest rate without having to hold higher capital. Presently in the US exten sive problems have emerged with respect to bank's activities in low and middle-i ncome groups. increasing consolidation of wealth in fewer hands. Also.
In both crises the banks were holding capital way short of what the risk of default of their l
. especially those responsible for the creation of the linchpin currenc y . I cannot be certain of all the things the BIS do es but I think it is important to note that this is the main place for the meeti ng of minds of the world's most powerful central bankers. representing these organizations. according to the BIS web site. Nor do public bank financial statements reveal such details.org. A behind-the-scenes loo k would reveal that in the late 1980s the US and other bank regulators saw the n eed to introduce better risk-based capital requirements in the wake of the emerg ing Savings and Loans Debacle and the Latin American Debt Crisis. 2. These meetings are con ducted in private. I do not conside r this exercise to be inconsistent with my duty as an actuary to sound alarm bel ls when risks are getting out of hand. Public information from the IMF does not reveal how bailout sums are determined or what creditors are at the other e nd of the bailout packages. In fac t the International Actuarial Society. My profes sion is built around the practice of financial risk management and it is my opin ion that the financial and other risks to the broader public of the global finan cial order are unacceptable. The BIS is an international bank for central bankers. More recently other countries' central banks have been able to join the BIS b ut it is dominated by the G-10. Based on public information it is not easy to fully understand a bank's risk exp osures and it has been widely acknowledged by many bank industry watchers that t his is a key part of the success of the monetary system. whose d ominant members are the central banks (NOT governments) of the G-10 + Switzerlan d. No doubt. The BCA of 1988. has sub mitted public comments on BCA that do not overlap at all with the concerns expre ssed herein. In no way do the opinions expressed herein reflect the views of my employer nor the views of the professional actuarial societies of which I am a member. More information about the original A ccord can be found at the web site of the Bank for International Settlements (BI S) at www. For the monetary system is no more than a confidence game and this requires confidence in the banks at all times. so this is why I write this paper.bis.the same monetary system we all depend on . It is highly likely that the main beneficiaries of IMF bailouts are lar ge western creditors with banking licenses (and therefore those regulated under BCA standards) since these institutions sit closest to the heart of the internat ional monetary system. In looking at the banking sector extensive information abo ut exactly what is going on underneath is not easy to find in the public domain. very key decisions about the internationa l monetary system . came out of the need to set cons istent capital standards for international banks so that one country's banking s ector would not have regulatory advantages over another.However it should be noted that I am making these observations and drawing concl usions based on public information analyzed using skills acquired in my own trai ning as an actuary who has been primarily concerned with the insurance industry throughout my career.are made behind these closed doors. Background to Development of Basel Capital Accord (BCA) The first BCA came into existence in 1988.the US Dollar. Nevertheless I consider it the duty of any professional to consider the broader public implications of the goings on in their profession. This necessary secrecy surrounding the monetary system in order to keep confiden ce in the ($US driven) financial system probably has a lot to do with the secrec y that surrounds institutions like the IMF. as are the Federal Reserve's Open Market Committee and Federa l Advisory Council meetings. Any large hit to their balance sheet is most likely to th reaten global financial stability.
Due to the extensive co mplaints received from the banking sector (who. Pu blic input into draft BCA documents has been welcomed. the BCBS is composed of central bankers from the G-10. the current President of the Federal Reserve Bank of New York. First. not by separate national government bodies responsible for bank supervision. They also state that sophisticated banks should be allowed to use their own int ernal risk management techniques to set their own capital levels. and this opportu nity has certainly been utilized by the global finance sector. bank supervision standards are being set only by the wealthy countries that create all the hard currency. Th e domination by central bankers in this process means that most of the input wil l come directly out of the banking sector. are hosted by the BIS and are also conducted behind closed doors. not only in triggering the crisis. no doubt) revised draft in 2002. In a better world a large part of the role of bank supervision would be to prote ct some balance of power between creditors and debtors. As noted. This makes sense especially because this public is called upon to bailout banks whose capital can't cover their risks.THE committee that determines mon etary policy for the world's linchpin currency. So far the major groups of NGOs opposed to the Bretton Woods institutions and the global financia l order have not provided input and I am certain the BCBS is not expecting them to. responsible f or the BCA. rather than the general public or the ir elected representatives. This is a criti cal observation for several reasons. r egardless of how unsavory this system and its major players have become. but also in all the trouble the western creditors foun d themselves in once the crisis emerged. In a much better world the actual process of money origination would be democrat ic. and who therefor e sits on the Federal Open Markets Committee . It is important to note that the BCBS is currently chaired by William McDonough. They fo und that the old BCA did not have a sufficient capital charge for very risky cro ss-border loans over that for safer ones. The meetings of the Basel Committee on Banking Supervision (BCBS). of course. This is unlikely to cha nge in any hurry. Hence many creditors were incented to engage in very risky cross-border financing which played a large role. The latest public comment period ended on May 31st 2001. Instead the large intern ational banks seem to be moving into a world where they are gaining more ability to supervise themselves and this will become more evident as we study BCA. In the meantime it makes sense to focus attention on the supervision of those with credit creation powers in the dominant trusted monetary system. ba nk supervision standards are being set by those responsible for monetary policy. Second. wish to hold less cap ital and be less supervised) the BCBS is saying that they will have another roun d of comments for another (more bank friendly.oans implied and this ultimately led to the need for bailouts (from US public an d Latin American public). however. A behind-the-s cenes look reveals that the financial crises of the 1990's and subsequent IMF ba ilouts scared the heck out of those at the helm of the financial system. which it is far from today. Therefore it would be very nice to give them the big surprise of public inpu t from the members of the public who are not large.
. The reality is that we are stuck with the intern ational monetary system based on the US dollar because that is what people all o ver the world have placed their confidence and trust in. The structure of the BCBS and its role in producing the BCA is consistent with this observation. The BIS web site also states that the new BCA is coming out of a need to get awa y from one size fits all requirements. powerful financial players. and the need to better incorporate operat ional and market risks (to be discussed in Section 3) into capital requirements. though baby steps are being taken with the emergence of local currencies.
org ) The BCA contains what are known as the three pillars of bank supervision. However the emergence of the NBFIs poses a problem and this is giving the banks a lot of leverage in arguing against tough capital requirements. If NBFIs are also benefiting from these bailouts then maybe the solution is that NBFIs also need something similar to the BCA. They have various guarantees or bailout mechanisms backing them up such as F DIC funds and. so they may have an advantage if banks have to co mply with tougher capital and supervision requirements. Thus capital requirements act like sort of a charge on risky speculations.than a bank that takes less risks. then it must hold more capital -more of a safety net . It does not cover non-bank financial institutions (NBFI). This helps to curtail risky speculation (which can often serve to destabilize markets) and provides institutions with a capital buffer big enough
. This m eans that large NBFIs without a banking license (who do not create M3 money) can compete with bank financiers. Risk-based capital requirements demand that a bank's capital (or equity) be at l east as large as something specified as minimum capital. Minimum capital requirements act like a safety net and are set based on the risk iness of a bank's assets.bis. In any case that would be recomme nded from the point of view of prevention of crises for tougher capital requirem ents help curtail speculative activity. (Very Brief) Overview of BCA Standards (see www.It is important to note that BCA covers ONLY international banking institutions. I fear that the BCBS may cave in to such arguments. In one sense it is qu ite reasonable that banks should have tougher capital requirements and supervisi on standards on them for the following reasons They have the special privilege of being able to create money out of thin ai r. i ncluding security holdings) over its liabilities (primarily deposits of the nonbank public). Rather than ignoring these arguments on the basis that the banking sector has privileged access to various bailout mechanism s that NBFIs don t. of course. These are Pillar 1 Risk-Based Capital Requirements Pillar 2 Supervisory Review Process Pillar 3 Market Discipline = Reporting and Disclosure Requirements Each of these are now discussed in turn Pillar 1 Risk-Based Capital Requirements Capital is the excess of a bank's assets (mostly loans to the non-bank public. Basically NBFIs have emerged as a result of huge accumulation of financial capital into few han ds and the development of new instruments such as loan-backed securities. 3. If a bank makes lots of risky loans or holds risky sec urities. Hence many banks are approaching the BCBS with the complaint that the BCA unfair ly penalizes them for being a bank. the IMF bailouts that nobody wants to give us too much information on. Hence it i s important for the concerned public to remind the BCBS of these things and this makes it even more important to get access to the list of creditors benefiting from the IMF bailouts. and must use that privilege responsibly else the safety of the whole financia l system is put at risk.
Earnings on 5 Units in 10% Capit al Requirement = (100 5% .9 This equates to an ROE cost of 1. In the case of the example above we might like to calculate th e cost of capital of the extra 5 units of capital that had to be held as capital in the 10% requirement. These risks are Credit Risk = Default risk. Therefore it woul d be appropriate for such advocates to have some input into BCA. So you can see why banks like lower capital requirements on the same set of asse ts and why good risk-based capital requirements help deter certain risky or spec ulative activities. The costs of capital of these 5 units is Earnings on 5 units in 5% Capital Requirement . then the bank can create a total of 100 units in assets by lending with 90 in liabilities and 10 in capital. In turn this helps reduce the need for publicly funded bailouts of the banking industry such as what happened with the S&L Debacle and what seems to happen with IMF bailouts. .5%. Example of the Cost of Capital Charge . which for banks is normally arou nd 20% after tax.to absorb the higher expected losses on the asset. Minimum capital is defined in BCA as 8% Risk Weighted Asset Base The risk weighted asset base brings assets into capital requirements commensurat e with the risks associated with them.95 3%) . then the bank can create a total of 200 units in assets by lending with 190 in liabilities and 10 in capital. . but got to be released and invested in banking business (making loans) for another 100 in loans in the 5% requirement.5% 5 = 1.190 3%) 10 = 43% Banks refer to the cost of capital as the earnings that are given up by holding capital earning whatever the assets are invested in (usually a low risk bond rat e) versus the required shareholder return rate. Then s hareholders Return on Equity (ROE) is (100 5% .If capital requirements are at 10% assets. Then s hareholders Return on Equity (ROE) is (200 5% .Let's suppose the bank's assets will earn 5% and its liabilities will costs 3% .
.Suppose shareholders have 10 units of equity capital to invest in a bank.95 = 38% = 43% . To see how banks view capital requirements and to see why they like this charge to be as low as possible (especially since handy public bailouts are often avail able anyway) it is useful to look at an example.90 3%) 10 = 23% .If capital requirements are at 5% assets. Advocates of the so-called Tobin Tax should be rather fond of well-crafted capit al requirements for banks and also other non-bank speculators.
f raud. In what follows I will focus primarily on Credit Risk requirements because this is the primary risk for banks and is the main culprit in financial crises. such as collateral against loans. mistiming trades. Expla nation of how this risk is being treated under the new BCA will serve to illustr ate the direction things are headed in and will sound most of the necessary alar m bells. Interestingly a risk weighting of 100% for commercial real estate is being proposed because t his area has been so much of the cause of recent financial crises. (Note that Interest Rate Risk is NOT explicitly addressed here but rather is addressed under Pillar 2). no explicit mention is made of certain types of loans that caused great shocks to the financial system in the late 1990s. Specifically I am talking abou t the loans underlying the Long Term Capital Management (LTCM) crisis whereby ma jor US banks lent heavily to this high-risk. 50%. 100% or 150% The factor will be selected based on the claim counter-party type (sovereign . guarantees. and the fact that they are NOT REGULATED because they involve sophisticated investors the BCA should address this explicitly. The Internal Ratings Based (IRB) Approach First bank assets are categorized into one of the six categories of corp orates. BCA also sets out the capital relief that will be given for various credit m itigation techniques. or the Export Credit Agencies. This is based on the amount of the asset covered by such risk mitiga tion techniques. corporate) and their rating from an independent body such as Standard an d Poors. their tendency to get debt capital from banks on favorable terms. and credit d erivatives. banks. Under the IRB approach banks will use their own internal measures and te chniques for setting the Probability of Default associated with each borrower gr ade. and equity. Operational Risk = other risks such as computer failure. bank.Market Risk = Risk of loss on market positions in the Trading Book (defined later). Given the growth in these he dge funds and similar vehicles.
0%. retail. For claims such as retail mortgages a bl anket 50% is used and for unrated entities a blanket 100% is used. 20%. The unnamed high risk activities with discretion for setting capital requirements is an area wid e open for abuse. highly leveraged hedge fund whose l osses almost collapsed the global financial system. Credit Risk Assessment The contribution of bank assets (loans or securities) to the risk weighted asset base for credit risk can be calculated using one of these methods Standardized Approach to Credit Risk Each bank asset is assigned one of the following weights to enter into the Risk Weighted Asset Base. project finance. sovereigns. Either the regulators (under the Foundation Approach) or the banks themselv
. Though a passing statement is made about higher risk weights for higher risk loans.
Advanced techniques. instruments like credit derivatives are very ne w. rather than having any minimal capital requirements or basic tests specified under Pillar 1
. and credit derivatives based on the amoun t of the asset covered. the loss given default and the maturity of the loan under the advanced approach. and is function of both the probability of default. Another adjustment is made to the group of assets for concentrated risk exposure to single borrowers. This means that.Foundation a nd IRB . For example. Without going into this detail here I think it suffices to use the terminology t hat the BCA uses . It is very interesting that the insura nce industry regulators do not yet allow such capital relief on credit derivativ es. Exposure at Default and treatme nt of guarantees and credits.es (under the Advanced Approach) will set the other variables for assigning a ri sk weighting . Furthermore the complexity of both the methodology for the subjective approaches and the complexity of the underlying financial ins truments will make it very difficult for the regulators to adequately monitor ca pital requirements. complex and specul ative investments is wide open for abuse. These are the same banks that tend to exercise power over their regulators rathe r than the other way around. generally. IRB . There are very detailed sets of rules for the circumstances under which banks ma y be able to set capital requirements under the Standardized. Interest Rate Risk arises from duration mismatch between assets and liabilit ies which is a major profit source for all financial operations. which are then to be reviewed by the Bank Regulators under Pillar 2. the self-setting of capital requirements will be done by the largest international banks who also suffer most from the too-big-to-fail moral hazard risk. guarantees. Market Risk. Under these approaches capital relief is also given for credit risk miti gation such as collateral.that sophisticated banks with sophisticated risk management t echniques will be the ones that get to set their own capital requirements. Trading intent includes benefiting from short term price movements and locking in arbitrage profits. to be assessed on a case-by-case basis in the supervisory review.these include Loss Given Default. a nd has certainly been a problem in recent financial crises. which might be a problem. and will often be used for purely speculative. Interest Rate Risk and Operational Risk Market Risk is now referred to as trading book risk and covers those positio ns in financial instruments and commodities held with trading intent or to hedge other risks in the trading book. Evidence of trading inten t must be available. as opposed to risk-mitigation. It is interesti ng to note that capital requirements for this are being dealt with under Pillar 2. Self-setting of capital requirements for such new. No adjustment appear s to be made for single groups of related borrowers. The BCA specifies asset valuation techniques for trading book risks and spec ific risk capital charges as a percentage of these asset values and capital reli ef for various hedging strategies. The risk weights for each asset are derived using a continuous formula s pecified by the BCA which assumes a normal default distribution. purposes. Without having assessed the impact or implica tions of these separate requirements I will just note that these types of distin ctions between trading book and non-trading book assets can create regulatory ar bitrage opportunities from the decision of where to place assets based on where they have the least capital requirement.
Because banks sit at the heart of credit (money) creation . It is also interesting to note that the insurance industry. Nevertheless it sounds like it has p otential for the general public to understand just what kind of risks the bankin g industry is getting us into. not bank m anagement. It is extremely difficult t o assess and. clearly need to be reminded of this as they seem to have forgotten tha t they have any responsibility to the public at all. and bank supervisors in general. This is because of the level of subjectivity and complexity involved in these banks bei ng able to set their own capital requirements. who bear ultimate responsibility for whether or not the banks have ad equate capital and risk management techniques.such as details of loans rescued by the IMF.it is the PUBLIC in general.
. Interestingly the current BCA draft states. The subjectivity of the banking industry's approach could leave this need for capital open for abuse.. and that this view they have is leading bank supervisors down a very dangerous path. and maybe even add some additional r equirements . the increasing cross-border acquisitions.such as syste ms failure. What already has become clear is that the major banks are complaining about the amount of detail of disclosure required under this Pillar. Obviously this role of the supervisor will become many times more c omplicated than it has been for those classified as sophisticated banks. and comparison of minimum capital to actual capit al. risk mitigation techniques. mistiming of trades. given the st atements above about who ultimately bears responsibility for bank risks. In this statement I would have to say that the BCBS is wrong. The BCBS. This involves review of banks' risk monitoring techniques and ensuring that banks comply with minimum capital r equirements. As noted earlier this is also where the too-big-to-fail moral hazard and associated risk is also greatest. In my view an adequate supervisory effort in the context of increasingly complex and subjective capital setting methodologies. a range of options are available fr om specified % income to highly subjective requirements for the sophisticated ba nks. in its section on Pillar 2 that Bank management clearly bears primary responsibility for ensuring that the bank has adequate capital to support its risks.at the heart of the international monetary system that we all depend on . for many years. has had specified minimum capital requirements for mismatch risk based on the na ture of liabilities as well as mandated asset adequacy tests whereby interest ra te shocks are applied to assetliability portfolios to test the adequacy of asset s. If only it were tr ue! Then we might have avoided so many nasty financial crises whose costs were u ltimately borne by the public and generally by those who could least afford it. Pillar 3 Market Discipline or Public Disclosure This includes disclosure of risk exposures and calculations of risk-based capita l. This sounds very nice. and the grow ing complexity of financial instruments is becoming almost impossible for the la rgest financial players. like with other risk measures. Without seeing an example or explicit list of reporting requirements it is d ifficult to know how detailed this will be. However. Pillar 2 Supervisory Review Process This section of the BCA describes the role of bank supervisors in making sure th at banks are managing their risks appropriately. fraud and so forth. Operational Risk arises from all other major sources of risk . the pub lic should prefer very detailed disclosure. in conjunction with the convergen ce of financial services.
Unfortunately none of these conditions hold today and this is discussed in more detail in the following poi nts. Mandating risk-sensitive capital requirements for banking book asse ts is very complex because of the diverse range of complex assets and loan struc tures banks can invest in (or really. It would also req uire that bank regulators actually have the resources and ability to properly mo nitor bank risk exposures and capital levels. There is also l ittle doubt that this facilitated the Long Term Capital Management Crisis. It is then thought that the supervisory role of regulators and various disclosure requirements will ensu re that banks' capital levels and risk management techniques are adequate. Under such changes the Federal Reserve became the US Umbrella Su pervisor of Financial Services Conglomerates. This has created large conglomerates involved i n all aspects of financial services and resulted in new regulatory structures in the form of umbrella supervision of the new conglomerates. While th e US Government body known as the Office of the Comptroller of the Currency stil l retains some powers as supervisor of national banks. create money for).4. but capital requirements the same. This has complicated financial supervision and also may create a shift towards more uniform supervis ion across financial operations (though we are not there yet.
. The last major industrialized nation to merge financial services was the United States in 1999. this would sound like a pretty good idea. It is the Federal Reserve in the United States who will ultim ately oversee the standards set by BCA. Trends in Bank Supervision As noted earlier bank supervision has undergone radical shifts in recent decades in part due to the worldwide convergence of financial services . in addition to retaining its previ ous powers as bank holding company and state-chartered bank supervisor. It seems that the Federal Reserve will have the ulti mate responsibility for the supervision of all big financial operators based in the United States. The mandating of quanti tative capital requirements tends to lump together assets with different risk pr ofiles into the same minimum capital requirement class.operations. broke rage and insurance . and the public had extensive oversight and input into banking system operations and risk management. heavi ly funded by large US banks. In a world where bank regulators truly represented the interests of the public. as for a lower risk asse t. or even close). This then leads to probl ems with banks investing predominantly in the most risky of this class where the returns are higher.banking. There is no question this was also a primary cause of the Latin American Debt crisis. Here banks largely set their own capital requirements based on their internal assessments of risk for the specific assets they hold. the af termath of which helped create the first round of Basel Accords. This reality played a major role in laying the foundations for the Asian financi al crisis whereby so many loans made by large creditors were related to overpric ed real-estate that didn't carry a capital charge over safer loans. because BCA applies to the international players that will be supervised by the Fed. It is highly likely that this problem of mandated % capital requirements for bro ad asset groups and the extensive regulatory arbitrage it generates is a large p art of the rational behind the BCA recommendations of Internal Ratings Approache s. today the Federal Reserve is the king of regulators. as well as the necessary authority to make banks improve their practices where needed. Problems with the new BCA from Public Interest Perspective Bank supervision and the setting of risk-based capital requirements are very com plex issues.
a lthough the Federal Reserve has some government oversight its operations are dis proportionately controlled by the private banking sector itself. These close relations are likely to get even closer under the self-r egulation approach proposed by BCA for the larger banks. and the Fed's desired increase in interest rates would surely tr igger such defaults. the very same g roup supervised by the Fed.This reality is potentially fraught with peril for a number of reasons.hike up US inter est rates.can and does often directly conflict with the goals of monetary policy.concerned with safety and soundness in the banking system . First. This creates the potential for very harmful conflicts of interest with worldwide consequence s. and that the Federal Reserve Board is generally dominated by Wall Street choices . of course! The recognized dangers of having the umbrella financial regulator be the same en tity as that responsible for monetary policy are illustrated by the fact that no other major industrialized nation has put these two. So by the end of the 1970's past credit expansion had led banks int o a situation where defaults on Latin loans could not be swallowed by their low capital levels. often conflicting. the US Dollar. The end result that solved this conflict . sort of like permanent fixtures there. Second is the fact that the Federal Reserve is first and foremost responsible fo r the monetary policy of the world's linchpin currency. and the ones for which bailouts are most necessary. the Federal Reserve (as bank holding company superv isor) had allowed banks to expand loans well beyond what their capital levels co uld support. functio ns under the same body. At the same time. The fact that this has been done only in the country tha t is responsible for credit creation in the linchpin currency could have serious global ramifications as the example of the Latin debt crisis indicates. These staff work mostly on site at the big banks. and don't bode well for independent supervision of the larger banking entities. or actually like staff of the banking gr oup itself. That is. the big banks. The role of supervisor . wanted to raise interest rates t o squash inflation. These new rules have the potential to increase both the frequency and severity o f IMF bailouts by allowing more risks to be taken and by allowing those most in need of bailout mechanisms the most leeway for bending the rules during their se lf-regulation. A classic example of this arose before the Latin Debt Crisis when the Federal Reserve. The incredible complexities of monitoring the capital adequacy of financial cong lomerates in a world of increasingly complex instruments and loan structures und er the self-regulatory methods of the Internal Ratings Based (IRB) approach (spe cified by BCA) will likely made adequate bank supervision a Herculean task! Give n that a potentially talented bank supervisor would makes pots more money workin g for the banks themselves. the job is close to impossible and therefore wide op en to abuse by those banks most likely to adopt IRB. It also comes from the fact that most (67 %) of the directors of the 12 Federal Reserve Banks are appointed by the banks. Global Financial Consolidation and Too-Big-to-Fail Risks
. who are the primary Federal Reserv e Board advisors and are 100% bankers. from a monetary policy point of view. trigger the Latin Debt Crisis and have the IMF and World Bank come in as lenders of last resort to bail out the US banks! And who paid for this crisi s for which the conflict of interest in supervisory structuremonetary policy was largely responsible The people of Latin America. The situation in the United States before Gramm-Leach-Bliley was that the Federa l Reserve as bank holding company supervisor would basically assign staff either from Washington andor the local regional Fed bank to work permanently on the su pervision of the larger banks. based on earlier years' desire for credit expansion (a monetary goal). This domination by the banking sector comes partly f rom the role of the Federal Advisory Council.
The Federal Reserve completel y ignored all public opposition to this deal. the Asian Financial Crises and the US Savi ngs and Loans Debacle. The new BCA also does little to outside more traditional loans. This also exacerbates the risks that hedge funds introduce into the market s by providing them with an easy source of financing. in the aftermath of which various count ries and investors were forced to sell off their bankrupt financial institutions at fire-sale prices to the Western institutions who benefited from the IMF bail outs. are accelerating the pace of cross -border acquisitions by large Western institutions. mergers and acquisitions between financial institutions have also been accelerating. Further compounding the problem is that these same regulators are allowing mergers and acquisitions to proceed unheeded. now the financial regulation king. However the new BCA does not appear to address this increa sing risk of exposure to hedge funds explicitly at all. With no extra capital ch arge on hedge fund financing. Furthermore these financial empires seem to be acquiring greater powers over the ir own supervisors. meaning that supervisors may not be able to control them any way. system in general. For example urrency attacks would go a long l system. Domestically. banks are probably taking excessive risks in this area. The best e xample of that recently was the Federal Reserve's speedy approval of Citigroup's acquisition of the Mexican banking giant Banamex. address the issue of bank speculative activity. and gave no justification for its approval or for overlooking public complaints. They are also completely unregul ated on the premise that they involve sophisticated investors. even if they wanted to. Addressing Causes of Financial Crises We saw earlier that some of the requirements in the new BCA are aimed at address ing some of the causes and excessive risk taking that ended in various crises su ch as the Latin American Debt Crisis. The incentives for abuse of minimal capital requirements created by the too-big -to-fail moral hazard are tremendous. administered by the WTO. One can conclude from this that t he Federal Reserve. This may also give the larger players extr a competitive advantages via lower capital charges and thereby facilitate more a cquisitions. within the borders of the G-10 countries. banks have been making significan t loans to these hedge funds without any corresponding capital charge commensura te with the risks involved. and what risk this introduces into the financial some disincentive on speculative activity like c way towards reducing major risks in the financia
Credit Creation for the Poor and Predatory Lending The fact that under both the old and new BCA there are no additional capital cha rges for sub-prime loans seems to have created a situation whereby banks are ori
. does not consider itself at all subject to the discipline of democratic accountability. Yet other areas of concern are notably absent. will also be able to set their own internally determined capital requirements. The past few years have seen a ri se in what are known as hedge funds which are generally high risk. Another contributor to this activity was the Asian financial crises. highly levera ged investment funds for the extremely wealthy. as noted earlier .International treaties like GATT. This is creating hu ge financial empires that are increasingly too-big-to-fail and. and under which new f inancial services agreements have been added. Fortunately the banking industry was able to bail it self out of this crises and the public did not have to bear the costs of the ass ociated recklessness. As we saw in the case of the Long Term Capital Management fund.
there could also be a very important role for risk-based capital requ irements on non-bank financial institutions to curtail the type of speculative a
. It seems that the lack of capital charge differential has incented a number of b anks to offer higher yielding sub-prime loans which reflect a higher risk in the return but not in the capital charge. and have abused their power over financially weaker de btors. therefore it is very important for NGOs to make this point. Non-Bank Financial Institutions BCA does not cover non-bank financial institutions. This has lead to banks increasingly accessing the r etail and overseas markets for credit creation. Therefore the likelihood of bailout is much higher for banks. A sneak preview of how the Federal Reserve may respond to interests of these groups in the future was provided by the Fed's speedy approval of Citigroup's recent acquisition of the Mexican banking group Banamex. Because of this central role in money creation it is more important for confidence to be maintained in banks than in n on-bank institutions. This tends to h appen with mortgages in the lower income markets and. In the US for example.ginating a significant amount of sub-prime loans to prime risks. due to their special status of being cre ators of money for the (M3) money supply. This has had tragic consequences for thes e borrowers with many people losing their homes in recent years. Part of the tremendous growth in both overseas lending and sub-prime lending by US banks has surely been driven by the fact that domestic non-bank corporations have sought financing from non-bank sources such that only 20% of their financin g actually comes from banks. One the surface it might not make too much sense for a non-bank lender to have d ifferent capital requirements than a lender with a banking license. This is what maintains the overall confidence in the inter national monetary system. in 2000 the Chair man of Fannie Mae reported that about one third of sub-prime home loans in the U S actually could have received a prime loan if credit assessment had been done p roperly. In this approval the Federal Reserve completely ignored all complaints from NGOs representing low income groups who have been harmed by Citigroup's wid espread predatory lending abuses. particularly the large ones. Supervision of US financial holding companies by the Federal Reserve does not bo de well for any representation of the interests of poorer and foreign creditors in bank supervision. However it d oes make more sense if one considers that banks are backed up by various bailout mechanisms including the IMF and FDIC. That said. Only stronger bank supervision representing the interests of these debtor s can help remedy such problems. I am pretty sur e that the folks who meet in Basel don't have lower income customers much on the ir minds. The total non-response by the Fed to all compl aints about the merger has lead many observers to wonder whether Citigroup actua lly supervises the Federal Reserve now. the banking industry has a long hist ory of discrimination in providing credit to various groups and a poor record of providing credit on reasonable terms in low and middle income neighborhoods. The Federal Reserve has a long track record of ignoring the interests of these groups and indeed has been lax in enforcing standards such a s the US Community Reinvestment Act. and bank capital requirements are of much g reater interest to the public than those of non-bank financial institutions. In general the whole area of predatory lending and credit creation powers over t he poor must be addressed in bank supervision standards and is currently nowhere to be found in BCA. in fact. However we are seeing variou s countries' umbrella supervisors feeling the pressure to streamline regulation in the wake of financial services convergence. In both of these markets the ban ks have not behaved well.
Thes e comments can be viewed at the BIS web site at www. People opposing the Bretton Woods institutions and advocates of the Tobin Tax might want to kee p this in mind as risk-based capital standards develop across other financial pl ayers.S. nothing less than to create a world system of financial control.ctivity often responsible for causing crises in the first place.S.org B. Supervision of banks and their risk management pr actices are important public issues for reasons outlined above.bis. able to domina te the political system of each country and the economy of the world as a whole. in private hands..I.wizardsofmoney.g. only 1 or 2 are public concerns from outside the finance sector.I.S. the J.org. Building B. As described by Carroll Quigley. through Owen Young. However the unfortunate reality is that. comments from Citigroup and the America n Bankers Association) are generally asking for more leeway in setting their own capital requirements. but are certainly affected by such int ernational banking agreements. 5. Ho pefully this will provide opportunity for various NGOs to compile and submit a l ist of concerns. 20 01 but due to the number of comments about the current draft the BCBS has stated on its web site that it will issue another draft for comments in early 2002. Dawes Plan Young Plan The Apex of Control the German Cartels The Apex of Control
This interplay of ideas and cooperation between Hjalmar Sehacht in Germany and. from httpwww. Morgan interests in New York. as it works today.I. was only one facet of a vast and ambitious system of cooperation and international alliance for world control.orghtmlbookswall_streetchapter_01. The Apex of Control httpwww. and basically requesting lower capital standards.. this system was .reformed-theology. Further more there have been many complaints from the big banks about the proposed discl osure requirements. 12 This feudal system worked in the 1920s. Need for Public Input The previous sections have been prepared to present a case for public input into the Basel Capital Accord for the majority of the public who are not aligned wit h the interests of big financial players. through the medium of the private central bankers in each country who control the national money supp
.P. of the 200+ public comments received by the BCBS. This document is intended as a discussion document to begin the process of collecting comments and concerns from various NGOs working on moneta ry system issues.htm WALL STREET AND THE RISE OF HITLER By Antony C. Sutton TABLE OF CONTENTS Preface Introduction Unexplored Facets of Naziism PART ONE Wall Street Builds Nazi Industry Chapter One Wall Street Paves the Way for Hitler 1924 The 1928 The B. Originally the last comment period was supposed to be the one ended May 31st. The majority of com ments coming from the larger banks (e.
S. of course. however. and plannin g for the post-war world. These men were. In the early 1930s the guiding vehicle for this international system of financial and political control. Other nationals occupied other posts.. kept a personal representative in Ba sle during most of this time.13 It was such secret meetings. In the 1920s and 1930s. An American President was tran sacting the daily business of the Bank through a French General Manager. apex continued its work during World War II as the medium through which the bankers who apparently were not at war with each o ther continued a mutually beneficial exchange of ideas. th at H. the New York Federal Reserve System. httpwww. the Reichs-bank in Germany. meetings more secret than any ever held by Roya l Ark Masons or by any Rosicrucian Order. in their respective countries and had no direct contact with the personnel of the Bank. McKittrick [see infra] theft were of course situated permanently in Switzerland during this period and were not supposed to be subject to orders of their government at any time.. or withdrawing support from. for example.ly of individual economies. It is alleged. Except for Mr. are kep t in line with a system of rewards and penalties. . Schacht..orghtmlbookswall_streetchapter_01. and the Banque de Fran ce also more or less influenced the political apparatus of their respective coun tries indirectly through control of the money supply and creation of the monetar y environment. calle d by Quigley the apex of the system. politicians and political parties. and academies pr olific with ideas for world control useful to the international bankers. president of the Reichsbank. Switzerland. President Herbert Hoover blamed his 1932 defeat on withdra wal of support by Wall Street and the switch of Wall Street finance and influenc e to Franklin D. In the United States. although they only rarely and briefly penetrated behind the mask of secrecy.14 between the central bankers at the apex of control that so intrigued contemporary journalists. Roosevelt. the Bank of England. Politicians amenable to the objectives of financial capitalism. in dai ly personal contact with each other. information. was the Bank for International Settlements in Basle. who had a German Assistant General Manager. More direct influence was realized by supplying political funds t o. The B. However. t he directors of the Bank remained.reformed-theology. of course. pre sent a highly anomalous situation in time of war. while the Secretary-General was an Italian subject. of course. war made no difference to the international bankers The fact that the Bank possessed a truly international staff did..I. As one writer has observed.htm back to the index