B.I.S. - ex-Nazi bank now the world central bank Settlements, Basel, Switzerland (2024)

Other Western Élites

Address: The Tower of Basel - Centralbahnplatz 2, 4051, Basel, Switzerland
http://www.bis.org/about/baselmap.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 architecture 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 elite representing the world's major central banks it controls most of the transferable money in the world. It uses that money to draw national governments into debt for the IMF.

BIS Official Website http://www.bis.org/
The Bretton Woods Project http://www.brettonwoodsproject.org/
WALL STREET AND THE RISE OF HITLER. By Antony C. Sutton http://reformed-theology.org/html/books/wall_street/index.html

05Aug03 - Rich Jannsen - Bank watching in Basel

The BIS - Ruling the World of Money - Edward Jay Epstein

Carrol Quigley quote - thebankers' 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

Unravelingthe Basel Capital Accord

Antony Sutton - B.I.S. The Apex of Control

All pictures on this page are by Richard Janssen

I was on business-travel from city to city in Switzerland. After the workin Basel 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 fromeachother. 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 hasa indoor connection with BIS, I saw it with my own two eyes!

After that I went to Geneva via Evian. Evian-les-Bains in France was alsoa place worth to visit.

I didn't dare to take pictures of some particular buildings, because throughmy remarkable behavior in Basel I was followed by Securitas people everywhereI went. There was no place in Switzerland where I had to introduce myself,because Securitas already knew me in advance.

Of course I have been at 'Place des Nations', where all the global organisationsare based. Also I've been in the most-shattered bank in Geneva: theUBS-headquarters, it was full of nasty punchholes in the glass windows becauseof the quite recent demonstrations. Swiss people were really flabbergasted,because such demonstration of hooligans at the anti-globalists demonstrationsare new to them.

Everywhere I went, I was protected by Securitas. 'Big Bro Securitas' waswatching me all the time. I enjoyed every minute of it, because of thepredictable manners of Securitas-employees. Also in Bern I was heavily protectedby Securitas.

Back in Basel I went into the BIS building at the Central Station Place totry to open a bank-account. At that moment there was a press-conference goingon, 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 thereceptionist to open a bank account, but he lied to me that BIS is aprivate-bank.

After that I went to the Aeschenplatz and went in. The receptionist toldme frankly that the B.I.S. "IS NOT A BANK". Thanks, lady receptionist, thatwas exactly what I wanted to hear, that BIS is not a bank. Now it is confirmedby this BIS-employee!

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: http://www.monetary-reform.on.ca/main.shtml
email: editor@monetary-reform.on.ca

TEN TIMES A YEAR - once a month except in August and October - a small groupof well dressed men arrives in Basel, Switzerland. Carrying overnight bagsand attaché cases, they discreetly check into the Euler Hotel, acrossfrom the railroad station. They have come to this sleepy city from placesas disparate as Tokyo, London, and Washington, D.C., for the regular meetingof the most exclusive, secretive, and powerful supranational club in theworld.

Each of the dozen or so visiting members has his own office at the club,with secure telephone lines to his home country. The members are fully servicedby a permanent staff of about 300, including chauffeurs, chefs, guards,messengers, translators, stenographers, secretaries, and researchers. Alsoat their disposal are a brilliant research unit and an ultramodern computer,as well as a secluded country 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 whodetermine daily the interest rate, the availability of credit, and the moneysupply of the banks in their own countries. They include the governors ofthe U.S. Federal Reserve, the Bank of England, the Bank of Japan, the SwissNational Bank, and the German Bundesbank. The club controls a bank with a$40 billion kitty in cash, government securities, and gold that constitutesabout one tenth of the world's available foreign exchange. The profits earnedjust from renting out its hoard of gold (second only to that of Fort Knoxin value) are more than sufficient to pay for the expenses of the entireorganization. And the unabashed purpose of its elite monthly meetings isto coordinate and, if possible, to control all monetary activities in theindustrialized world. The place where this club meets in Basel is a uniquefinancial institution called the Bank for International Settlements - ormore simply, and appropriately, the BIS (pronounced "biz" in German).

THEBIS was originally established in May 1930 by bankers and diplomats of Europeand the United States to collect and disburse Germany's World War I reparationpayments (hence its name). It was truly an extraordinary arrangement. Althoughthe BIS was organized as a commercial bank with publicly held shares, itsimmunity from government interference - and taxes in both peace and war wasguaranteed by an international treaty signed in The Hague in 1930. Althoughall its depositors are central banks, the BIS has made a profit on everytransaction. And because it has been highly profitable, it has required nosubsidy or aid from any government.

Since it also provided, in Basel, a safe and convenient repository for thegold holdings of the European central banks, it quickly evolved into thebank for central banks. As the world depression deepened in the Thirtiesand financial panics flared up in Austria, Hungary, Yugoslavia, and Germany,the governors in charge of the key central banks feared that the entire globalfinancial system would collapse unless they could closely coordinate theirrescue efforts. The obvious meeting spot for this desperately needed coordinationwas the BIS, where they regularly went anyway to arrange gold swaps andwar-damage settlements.

Even though an isolationist Congress officially refused to allow the U.S.Federal Reserve to participate in the BIS, or to accept shares in it (whichwere instead held in trust by the First National City Bank), the chairmanof the Fed quietly slipped over to Basel for important meetings. World monetarypolicy was evidently too important to leave to national politicians. DuringWorld War II, when the nations, if not their central banks, were belligerents,the BIS continued operating in Basel, though the monthly meetings weretemporarily suspended. In 1944, following Czech accusations that the BISwas laundering gold that the Nazis had stolen from occupied Europe, the Americangovernment backed a resolution at the Bretton Woods Conference calling forthe liquidation of the BIS. The naive idea was that the settlement andmonetary-clearing functions it provided could be taken over by the newInternational Monetary Fund. What could not be replaced, however, was whatexisted behind the mask of an international clearing house: a supranationalorganization for setting and implementing global monetary strategy, whichcould not be accomplished by a democratic, United Nations-like internationalagency. The central bankers, not about to let their club be taken from them,quietly snuffed out the American resolution.

After World War II, the BIS reemerged as the main clearing house for Europeancurrencies and, behind the scenes, the favored meeting place of central bankers.When the dollar came under attack in the 1960s, massive swaps of money andgold were arranged at the BIS for the defence of the American currency. Itwas undeniably ironic that, as the president of the BIS observed, "the UnitedStates, which had wanted to kill the BIS, suddenly finds it indispensable."In any case, the Fed has become a leading member of the club, with eitherChairman Paul Volcker or Governor Henry Wallich attending every "Basel weekend."

"It was in the wood-paneled rooms above the shop and the hotel that decisionswere reached to devalue or defend currencies, to fix the price of gold, toregulate offshore banking, and to raise or lower short-term interestrates."

ORIGINALLY, the central bankers sought completeanonymity for their activities. Their headquarters were in an abandonedsix-storey hotel, the Grand et Savoy Hotel Universe, with an annex abovethe adjacent Frey's Chocolate Shop. There purposely was no sign over thedoor identifying the BIS so visiting central bankers and gold dealers usedFrey's, which is across the street from the railroad station, as a convenientlandmark. It was in the wood-paneled rooms above the shop and the hotel thatdecisions were reached to devalue or defend currencies, to fix the priceof gold, to regulate offshore banking, and to raise or lower short-term interestrates. And though they shaped "a new world economic order" through thesedeliberations (as Guido Carli, then the governor of the Italian central bank,put it), the public, even in Basel, remained almost totally unaware of theclub and its activities.

In May 1977, however, the BIS gave up its anonymity, against the better judgementof some of its members, in exchange for more efficient headquarters. Thenew building, an eighteen-story-high circular skyscraper that rises overthe medieval city like some misplaced nuclear reactor, quickly became knownas the "Tower of Basel" and began attracting attention from tourists. "Thatwas the last thing we wanted, " Dr. Fritz Leutwiler, current president ofboth the BIS and the Swiss National Bank, explained to me while watchingcurrency changes flash across the Reuters screen in his office. "If it hadbeen up to me, it never would have been built."

Despiteits irksome visibility, the new headquarters does have the advantages ofluxurious space and Swiss efficiency. The building is completely air-conditionedand self-contained, with its own nuclear-bomb shelter in the sub-basem*nt,a triply redundant fire-extinguishing system (so outside firemen never haveto be called in), a private hospital, and some twenty miles of subterraneanarchives. "We try to provide a complete clubhouse for central bankers ...a home away from home," said Gunther Schleiminger, the super-competent generalmanager, as he arranged a rare tour of the headquarters for me.

The top floor, with a panoramic view of three countries - Germany, France,and Switzerland - is a deluxe restaurant, used only to serve the membersa buffet dinner when they arrive on Sunday evenings to begin the "Baselweekends." Aside from those ten occasions, this floor remains ghostly empty.

On the floor below, Schleiminger and his small staff sit in spacious offices,administering the day-to-day details of the BIS and monitoring activitieson lower floors as if they were running an out-of-season hotel.

The next three floors down are suites of offices reserved for the centralbankers. All are decorated in three colors - beige, brown, and tan - andeach has a similar modernistic lithograph over the desk. Each office alsohas coded speed-dial telephones that at a push of a button directly connectthe club members to their offices in their central banks back home. Thecompletely deserted corridors and empty offices - with nameplates on thedoors and freshly sharpened pencils in cups and neat stacks of incoming paperson the desks - are again reminiscent of a ghost town. When the members arrivefor their forthcoming meeting in November, there will be a remarkabletransformation, according to Schleiminger, with multilingual receptionistsand secretaries at every desk, and constant meetings and briefings.

On the lower floors are the BIS computer, which is directly linked to thecomputers of the member central banks, and provides instantaneous accessto data about the global monetary situation, and the actual bank, where eighteentraders, mainly from England and Switzerland, continually roll over short-termloans on the Eurodollar markets and guard against foreign-exchange losses(by simultaneously selling the currency in which the loan is due). On yetanother floor, gold traders are constantly on the telephone arranging loansof the bank's gold to international arbitragers, thus allowing central banksto make interest on gold deposits.

Occasionally there is an extraordinary situation, such as the decision tosell gold for the Soviet Union, which requires a decision from the "governors,"as the BIS staff calls the central bankers. But most of the banking is routine,computerized, and riskless. Indeed, the BIS is prohibited by its statutesfrom making anything but short-term loans - most are for thirty days or less- that are government-guaranteed or backed with gold deposited at the BIS.The profits the BIS receives for essentially turning over the billions ofdollars deposited by the central banks amounted to $162 million last year.

AS SKILLED as the BIS may be at all this, the central banks themselves havehighly competent staff capable of investing their deposits. The GermanBundesbank, for example, has a superb international trading department and15,000 employees - at least twenty times as many as the BIS staff. Why thendo the Bundesbank and the other central banks transfer some $40 billion ofdeposits to the BIS and thereby permit it to make such a profit?

One answer is, of course, secrecy. By commingling part of their reservesin what amounts to a gigantic mutual fund of short-term investments, thecentral banks create a convenient screen behind which they can hide theirown deposits and withdrawals in financial centers around the world. For example,if the BIS places funds in Hungary, the individual central banks do not haveto answer to their governments for investing in a communist country. Andthe central banks are apparently willing to pay a high fee to use the cloakof the BIS.

There is, however, a far more important reason why the central banks regularlytransfer deposits to the BIS: they want to provide it with a large profitto support the other services it provides. Despite its name, the BIS is farmore.than a bank. From the outside, it seems to be a small, technicalorganization. Just eighty-six of its 298 employees are ranked as professionalstaff. But the BIS is not a monolithic institution: artfully concealed withinthe shell of an international bank, like a series of Chinese boxes one insideanother, are the real groups and services the central bankers need -- andpay to support.

The first box inside the bank is the board of directors, drawn from the eightEuropean central banks (England, Switzerland, Germany, Italy, France, Belgium,Sweden, and the Netherlands), which meets on the Tuesday morning of each"Basel weekend." The board also meets twice a year in Basel with the centralbanks of Yugoslavia, Poland, Hungary, and other Eastern bloc nations. Itprovides a formal apparatus for dealing with European governments andinternational bureaucracies like the IMF or the European Economic Community(the Common Market). The board defines the rules and territories of the centralbanks with the goal of preventing governments from meddling in their purview.For example, a few years ago, when the Organization for Economic Cooperationand Development in Paris appointed a low-level committee to study the adequacyof bank reserves, the central bankers regarded it as poaching on their monetaryturf and turned to the BIS board for assistance. The board then arrangedfor a high-level committee, under the head of Banking Supervision at theBank of England, to preempt the issue. The OECD got the message and abandonedits effort.

To deal with the world at large, there is another Chinese box called theGroup of Ten, or simply the "G-10." It actually has eleven full-time members,representing the eight European central banks, the U.S. Fed, the Bank ofCanada, and the Bank of Japan. it also has one unofficial member: the governorof the Saudi Arabian Monetary Authority. This powerful group, which controlsmost of the transferable money in the world, meets for long sessions on theMonday afternoon of the "Basel weekend." It is here that broader policy issues,such as interest rates, money-supply growth, economic stimulation (orsuppression) , and currency rates are discussed - if not always resolved.

Directly under the G-10, and catering to all its special needs, is a smallunit called the "Monetary and Economic Development Department," which is,in effect, its private think tank. The head of this unit, the Belgian economistAlexandre Lamfalussy, sits in on all the G-10 meetings, then assigns theappropriate research and analysis to the half dozen economists on his staff.This unit also produces the occasional blue-bound "economic papers" thatprovide central bankers from Singapore to Rio de Janeiro, even though theyare not BIS members, with a convenient party line. For example, a recentpaper called "Rules versus Discretion: An Essay on Monetary Policy in anInflationary Environment," politely defused the Milton Friedmanesque dogmaand suggested a more pragmatic form of monetarism. And last May, just beforethe Williamsburg summit conference, the unit released a blue book on currencyintervention by central banks that laid down the boundaries and circ*mstancesfor such actions. When there are internal disagreements, these blue bookscan express positions sharply contrary to those held by some BIS members,but generally they reflect a consensus of the G-10.

OVER A BRATWURST-AND-BEER lunch on the top floor of the Bundesbank, whichis located in a huge concrete building (called "the bunker") outside ofFrankfurt, Karl Otto Pöhl, its president and a ranking governor of theBIS, complained to me about the repetitiousness of the meetings during the"Basel weekend." "First there is the meeting on the Gold Pool, then, afterlunch, the same faces show up at the G-10, and the next day there is theboard [which excludes the U.S., Japan, and Canada], and the European Communitymeeting [which excludes Sweden and Switzerland from the previous group]."He concluded: "They are long and strenuous - and they are not where the realbusiness gets done." This occurs, as Pöhl explained over our leisurelylunch, at still another level of the BIS: "a sort of inner club," as he putit.

The inner club is made up of the half dozen or so powerful central bankerswho find themselves more or less in the same monetary boat: along with Pöhlare Volcker and Wallich from the Fed, Leutwiler from the Swiss National Bank,Lamberto Dini of the Bank of Italy, Haruo Mayekawa of the Bank of Japan,and the retired governor of the Bank of England, Lord Gordon Richardson (whohad presided over the G -10 meetings for the past ten years). They are allcomfortable speaking English; indeed, Pöhl recounted how he has foundhimself using English with Leutwiler, though both are of course nativeGerman-speakers. And they all speak the same language when it comes togovernments, having shared similar experiences. Pöhl and Volcker wereboth undersecretaries of their respective treasuries; they worked closelywith each other, and with Lord Richardson, in the futile attempts to defendthe dollar and the pound in the 1960s. Dini was at the IMF in Washington,dealing with many of the same problems. Pöhl had worked closely withLeutwiler in neighboring Switzerland for two decades. "Some of us are veryold friends," Pöhl said. Far more important, these men all share thesame set of well-articulated values about money.

The prime value, which also seems to demarcate the inner club from the restof the BIS members, is the firm belief that central banks should actindependently of their home governments. This is an easy position for Leutwilerto hold, since the Swiss National Bank is privately owned (the only centralbank that is not government owned) and completely autonomous. ("I don't thinkmany people know the name of the president of Switzerland - even in Switzerland,"Pöhl joked, "but everyone in Europe has heard of Leutwiler.") Almostas independent is the Bundesbank; as its president, Pöhl is not requiredto consult with government officials or to answer the questions of Parliament- even about such critical issues as raising interest rates. He even refusesto fly to Basel in a government plane, preferring instead to drive in hisMercedes limousine.

The Fed is only a shade less independent than the Bundesbank: Volcker isexpected to make periodic visits to Congress and at least to take calls fromthe White House - but he need not follow their counsel. While in theory theBank of Italy is under government control, in practice it is an elite institutionthat acts autonomously and often resists the government. (In 1979, its thengovernor, Paolo Baffi, was threatened with arrest, but the inner club, usingunofficial channels, rallied to his support.) Although the exact relationshipbetween the Bank of Japan and the Japanese government purposely remainsinscrutable, even to the BIS governors, its chairman, Mayekawa, at leastespouses the principle of autonomy. Finally, though the Bank of England isunder the thumb of the British government, Lord Richardson was accepted bythe inner club because of his personal adherence to this defining principle.But his successor, Robin Leigh-Pemberton, lacking the years of business andpersonal contact, probably won't be admitted to the inner circle.

In any case, the line is drawn at the Bank of England. The Bank of Franceis seen as a puppet of the French government; to a lesser degree, the remainingEuropean banks are also perceived by the inner club as extensions of theirrespective governments, and thus remain on the outside.

A second and closely related belief of the inner club is that politiciansshould not be trusted to decide the fate of the international monetary system.When Leutwiler became president of the BIS in 1982, he insisted that nogovernment official be allowed to visit during a "Basel weekend." He recalledthat in 1968, U.S. Treasury undersecretary Fred Deming had been in Baseland stopped in at the bank. "When word got around that an American Treasuryofficial was at the BIS," Leutwiler said, "bullion traders, speculating thatthe U.S. was about to sell its gold, began a panic in the market." Exceptfor the annual meeting in June (called " the Jamboree" by the staff), whenthe ground floor of the BIS headquarters is open to official visitors, Leutwilerhas tried to enforce his rule strictly. "To be frank," he told me, "I haveno use for politicians. They lack the judgement of central bankers." Thiseffectively sums up the common antipathy of the inner club toward "governmentmuddling," as Pöhl puts it.

The inner-club members also share a strong preference for pragmatism andflexibility over any ideology, whether that of Lord Keynes or Milton Friedman.For this reason, there was considerable apprehension last spring that PaulVolcker would be replaced by a supply-side ideologue like Beryl Sprinkel,and considerable relief when he was reappointed for another term. Ratherthan resorting to rhetoric and invoking principles, the inner club seeksany remedy that will relieve a crisis. For example, earlier this year, whenBrazil failed to pay back on time a BIS loan that was guaranteed by the centralbanks, the inner club quietly decided to extend the deadline instead ofcollecting the money from guarantors. "We are constantly engaged in a balancingact - without a safety net," Leutwiler explained.

THE FINAL AND by far the most important belief of the inner club is theconviction that when the bell tolls for any single central bank it tollsfor them all. When Mexico faced bankruptcy last year, for instance, the issuefor the inner club was not the welfare of that country but, as Dini put it,"the stability of the entire banking system." For months Mexico had beenborrowing overnight funds from the interbank market in New York - as everybank recognized by the Fed is permitted to do - to pay the interest on its$80 billion external debt. Each night it had to borrow more money to repaythe interest on the previous nights transactions, and, according to Dini,by August Mexico had borrowed nearly one quarter of all the "Fed Funds,"as these overnight loans between banks are called.

The Fed was caught in a dilemma: if it suddenly stepped in and forbade Mexicofrom further using the interbank market, Mexico would be unable to repayits enormous debt the next day, and 25 percent of the entire banking system'sready funds might be frozen. But if the Fed permitted Mexico to continueborrowing in New York, in a matter of months it would suck in most of theinterbank funds, forcing the Fed to expand drastically the supply of money.

It was clearly an emergency for the inner club. After speaking to MiguelMancera, director of the Banco de Mexico, Volcker immediately called Leutwiler,who was vacationing in the Swiss mountain village of Grison. Leutwiler realizedthat the entire system was confronted by a financial time bomb: even thoughthe IMF was prepared to extend $4.5 billion to Mexico to relieve the pressureon its long-term debt, it would require months of paperwork to get approvalfor the loan. And Mexico needed an immediate fix of $1.85 billion to getout of the interbank market, which Mancera had agreed to do. But in lessthan forty-eight hours, Leutwiler had called the members of the inner cluband arranged the temporary bridging loan.

While this $1.85 billion appeared - at least in the financial press - tohave come from the BIS, virtually all the funds came from the central banksin the inner club. Half came directly from the United States - $600 millionfrom the Treasury's exchange-equalization fund and $325 million from theFed's coffers; the remaining $925 million mainly from the deposits of theBundesbank, Swiss National Bank, Bank of England, Bank of Italy, and Bankof Japan, deposits that were specifically guaranteed by these central banks,though advanced pro forma by the BIS (with a token amount advanced by theBIS itself against the collateral of Mexican gold). The BIS undertook virtuallyno risk in this rescue operation; it merely provided a convenient cloak forthe inner club. Otherwise, its members, especially Volcker, would have hadto take the political heat individually for what appeared to be the rescueof an underdeveloped country. In fact, they were - true to their paramountvalues - rescuing the banking system itself.

On August 31 of this year, Mexico repaid the BIS loan. But the bailout wasonly a temporary, if not pyrrhic, victory. With the multibillion-dollar debtsof a score of other countries - including Argentina, Chile, Venezuela, Brazil,Zaire, the Philippines, Poland, Yugoslavia, Hungary, and even Israel - hanginglike so many swords of Damocles over its sacred monetary system, the innerclub has "no choice," as Leutwiler has concluded, but to remain a crisismanager. This new role has created considerable concern among the outer circle,and even in the Bank of England, since the members who don't entirely sharethe mentality of the inner club want the BIS to remain primarily a Europeaninstitution. "Let the Fed worry about Brazil and the rest of Latin America- that is not the job of the BIS," a blunt representative of the Bank ofEngland, definitely not part of the inner club, told me. Others at the BIShave argued that it does not have the experience or facilities to become"a mini-IMF - putting out fires around the world," as one staffer describedit.

To mollify such dissent on the periphery, inner club members publicly paylip service to the ideal of preserving the character of the BIS and not turningit into a lender of last resort for the world at large. Privately, however,they will undoubtedly continue their maneuvers to protect the banking systemat whatever point in the world it seems most vulnerable. After all, it isultimately the central banks' money at risk, not the BIS's. And the innerclub will also keep using the BIS as its public mask - and pay the requisiteprice for the disguise.

The next meeting of the inner club is Monday, November 7.....

Edward Jay Epstein is the author of The Rise and Fall of Diamonds, Legend:The Secret World of Lee Harvey Oswald, and News From Nowhere. He also haswritten a book on international deception.

UPDATE (9 years later) -

Investor's Business Daily, May 1, 1992 summed up the character of the BISin an article entitled:

Why a Global Credit Crunch? Some say Little-known BIS Is Partly to Blame- Despite its global anonymity, the BIS is one of the most powerful financialinstitutions in the world ...

In the book Global Financial Integration: the End of Geography, author RichardF. O'Brien further confirms the powerful role of the BIS:

In the financial marketplace, the trend towards some sort of global governanceis best represented by the efforts of bank supervisors under the aegis ofthe Bank for International Settlements in Basel to impose common minimumcapital requirements on banks ... and to integrate and coordinate the supervisionof banking, securities markets and insurance ...

Financial World Magazine - February 16, 1993 "Where Has All the Money Gone?"explains how the BIS has more recently flexed its muscle:

Even before Japan's equity markets began to contract, regulations put intoeffect in 1988 by the Bank of International Settlement's Committee on Bankingregulation and Supervisory Practices had begun to exact a particularly heavytoll on Japanese lenders. Those regulations require the world's bankers toraise their underlying asset bases, the money against which they lend, to8% to total capital, more than double the asset average of the 1980's.- JEpstein

"The Power of financial capitalism had [a] far reaching plan, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole.
This system was to be controlled in a feudalistic fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences.
The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks, which were themselves private corporations.
Each central bank sought to dominate its government by its ability to control treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence co-operative politicians by subsequent rewards in the business world."

Carrol Quigley, Tragedy and Hope, 1966 - [Bill Clinton's mentor and Georgetown University professor]

Alfred Mendez <alfred.mendes@virgin.net>-

Seealso Alfred Mendez' article AN UNCOMMON VIEWOF THE BIRTH OF AN UNCOMMON MARKET on my Bilderberg History page

http://www.spectrezine.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, see belowed.] was created in order to bestow meaning in simplistic, delineated formto such terms as 'free market', 'new world order' and 'globalisation' - termsthat have dominated political/economic terminology over the past twodecades-or-so, and the fact that it focusses on banks and bankers (a professionendowed with the aura of authority in the eyes of the public) is quite simplybecause, without money, those terms are meaningless. Indeed, the title itselfemphasises the role of money: After all, what is a banker if he's not a traderin money? Similarly, 'globalisation' would be equally meaningless if suchpolitically omnipotent groups as the Bilderberg Group and the TrilateralCommission were not taken into account when assessing it's (globalisation's)significance. Moreover, how is it possible to disassociate banker from politicianfrom businessman when, at times, one individual is all three - and, in anycase, they are constituent parts of a single entity: the corporate establishment?Hence the inclusion of these two groups withinthe graph.

The Bilderberg (or BB from now on) was formed in 1954 out of the need ofcorporate America to ensure cohesion of purpose on the part of its Europeanpartners in the recently formed North Atlantic Alliance (NATO) - the twinaim being to facilitate the flow of American capital into the region, andto bring Germany into the Alliance (against, it should be noted, the wishesof many of its partners). That it is a group endowed with enormous politicalclout can be attested to by: (1) examination of the lists of committee membersand conference attendees over the years - together with the gravity andimportance of the subjects discussed at these conferences (NATO, understandably,being repeatedly a key subject); and (2) these conferences take place undervery strict security cover supplied by the respective host countries - eventhough implicit within the structure of this cabal is its unaccountable,secretive nature.

The Trilateral Commission (or TRI from now on) was formed in 1973, its agendadetermined by the corporate-funded Brookings Institute and the KetteringFoundation - with not-a-little-help from David Rockefeller of the Chase/ManhattanBank. That its projected formation should have been so enthusiastically acclaimedby the BB Conference in Knokke (Belgium) in 1972 should cause no surprise.Both corporate-controlled organisations, with linked membership, they sharedthe same aim: increasing globalisation of their wealth and power. Certainly,the BB with its total lack of any 'democratic accountability', must be inagreement with the TRI's declaration (published in their "The crisis ofDemocracy") that what the West needs most "is a greater degree of moderationin democracy". Though, on second thoughts, the former probably thinks the'the degree of moderation' somewht understated!

A further examination of both graph and list of bankers' names reveals that,of the banking organisations, the Banks for International Settlements (orBIS from now on) is self-evidently of prime importance on the internationalscene - not only because of its prestigious membership (embracing as it doesthe head bankers of the leading industrial nations) - but also because ofthe significance of its links with other groups. This article will focuson it, at the expense of the other better-known banking institutions, fortwo reasons: (1) its prime ranking in the international hierarchy; and (2)so little knowledge of it is in the public domain.

The BIS is the world's oldest international financial institution, havingbeen set up in 1930 with the twin aim of (1) coping with reparations/loansfrom/to a very unstable post-World War one Germany; and (2) more importantly,to act as a forum for central bankers in the future. As such, it was theepitome of supranationality - able to circumvent all those orthodox idealsthat had, over the years, become synonymous with the concept of the 'nationstate' - such as 'love of country', 'patriotism' etc., - the danger, of course,being that, in certain circ*mstances (such as a state of war), such circumventionof patriotism by any of its board members could lead to them being accusedof treasonable offences.

In order to appreciate what followed, it is essential to offer a briefresumé of the political/economic situation at the turn of the century:the Industrial Revolution, having fostered the rapid growth of a capitalisteconomy, inevitably gave birth to an ideal/dogma exposing the socio-politicaldiscord inherent within that same system which was based on the concept ofone comparatively small group of people garnering profit from the wealthcreated by the labor of a much larger group. Thus was Marxism born - leadingto the Bolshevik revolution in 1917.The USSR, now perceived by the industrialnations as representing the very antithesis of capitalism, was henceforth'the enemy'. The 'cold war' had begun, and its most blatant expression wasthe birth of fascism in the aftermath of the Bolshevik revolution - a birthboth induced and nurtured by corporations such as I.G.Farben, SKF, Ford,ITT and Du Pont - corporation which were fast becoming multi-national innature..Enter BIS. Set up in 1930 (see above),it consisted, initially, ofa group of 6 central banks and a 'financial institution of the USA'. Granteda constitution charter by Switzerland, it was henceforth based in that country.That America was by then a financial force to be reckoned with on theinternational scene is borne out by the fact that the first President appointedto the BIS was Gates W. McGarrah (ex-Chase National Bank & Federal ReserveBank).

By the late 1930's the BIS had assumed an openly pro-Nazi bias - much ofit disclosed by Charles Higham in his book "Trading With the Enemy", andyears later corroborated by a BBC Timewatch film "Banking With Hitler" (broadcastin late '98). Two examples of such bias (there were many more) were: (1)The BIS had arranged transfers into the account of the German's Reichbankof $378 million of what was, in effect, gold looted from the coffers of theinvaded countries of Austria, Czechoslovakia, Holland and Belgium; and (2)in the summer of 1942, plans for the projected American invasion of Algeriawere leaked to the governor of the French National Bank, who immediatelycontacted his German colleague in the BIS, SS Gruppenfuehrer Baron Kurt vonSchroder (of the Stein Bank of Cologne), and by transferring 9 billion goldfrancs to Algiers - via the BIS - the Germans and their French subsidiariesmade a killing of some $175 million in this dollar-exchange scam. Given themembership of the BIS at that time, this was hardly surprising. On the boardwere the following high-profile representatives of the Axis powers (therewere 4 others): Walther Funk (Pres. of the Reichbank); Kurt von Schroder(above); Dr. Hermann Schmitz (Jt.Chm. of I.G.Farben); Emil Puhl (V/Pres.of the Reichbank); Yoneji Yamamoto; and Dr. V. Azzolini (Gov. Bank of Italy).It should be added that, of the non-Axis members on the board, many - suchas Montagu Norman (Gov. of the Bank of England) were Nazi sympathisers, andthat the President of the BIS from 1939 to 1946 was Thomas McKittrick, anAmerican corporate lawyer who had been both Director of Lee, Higginson &Co. (a company which had made substantial loans to the Third Reich) and Chairmanof the British-American Chamber of Commerce in London. His continued presidencyof the BIS after America's entry into the war in December1941 was approvedby Germany and Italy with this significant addendum to their note ofauthorisation: "McKittrick's opinions are safely known to us".

With the above noted disclosures in mind, the policy of appeasem*nt pursuedby Britain and France towards Germany in the pre-war period can now be morereadily understood. By concluding a pact with Hitler, Britain and France- in effect - gave him the green light to advance eastwards (ref. "Mein Kampf").Furthermore, the fact that they shared his endemic anti-communism blindedthem to the risk that they were running by negotiating from a position ofcomparative military weakness - of which Hitler was perfectly aware - andfor which they paid a heavy price. It should also be added that the architectof this act of appeasem*nt, Prime Minister Chamberlain, was a shareholderin ICI, which had ties with I.G.Farben.

In the late '30's, and more particularly during World War 2, given America'sgreat wealth - as opposed to Europe's straitened circ*mstances - it wasinevitable that the trade between the two would be of a one-way nature, fromthe former to the latter. And not surprisingly, in view of the close relationshipbetween American and German corporations (as noted above), a substantialportion of supplies went to Germany - often via fascist Spain - by ship andtanker under flags of neutrality. Many of the financial arrangements coveringsuch trade were handled by BIS in neutral Basle. As an example of how substantialthis trade was: in mid-'44 Am,erica was supplying Germany with 48 thousandtons of oil, and 11 hundred tons of much-needed wolfram (tungsten) per month!The fact that this trade was illegal in the USA for much of this period -and particularly after America's entry into the war in December '41 - didlittle to stop such trade. The large corporations, such as Standard Oil andITT, saw to that. After all, then - as now - the US Administration waseffectively under corporate control (as it has been since 1933, during FDR'sterm of office). Even the Secretary of Treasury, Henry Morgenthau, and hisAssistant, Harry Dexter White, aware as they well were of the part playedby BIS in this, could do little about it. In July '44, 730 delegates from44 countries met at Bretton Woods to plan a framework for post-war internationaltrade, payments and investments - a conference which subsequently resultedin the setting up in'47 of both the International Bank for Reconstruction& Development (IBRD, or World Bank) and the International Monetary Fund(IMF). The apparent inviolability of the BIS referred to above was perhapsbest illustrated by the fact that Resolution 5, calling for the dissolutionof BIS, was subsequently ignored and proven ineffective. The corporateestablishment had seen to that - as indeed, it had seen to all such previousattempts.

With war's end now calling for a clearing of conscience, BIS's method ofachieving this was by stressing its somewhat euphemistic neutrality, whileplaying down its less palatable, but quintessential supranationality. Theirannual report of 1946 - as quoted in the Times - stated: "It is noted thatthe Bank has continued to supply the principles of strict neutrality, butthat circ*mstances have caused a further decline in the volume of its business".Further: "Wars are the worst cause of monetary convulsions, and the firstcondition for enjoying the benefits of an ordinary monetary system is toestablish and maintain a reign of peace". In view of their recent previoushistory, the term 'irony' hardly does justice to the above statements!. Thisreport was, incidentally, the last to be signed by its President, ThomasMcKittrick: in June 1946 he was appointedVice/Chairman of the Chase NationalBank by its owners, the Rockefellers - presumably as a mark of gratitudefor the assistance rendered to them by the BIS during his presidency.

In view of the somewhat puzzling fact that this now meant that there werein this post-war period three international financial/banking institutions- all with the self-evidently similar aim of resolving the world's seriouseconomic problems - a brief, close look is called for in order to clarifythe situation. The first (and intriguing) fact to be noted here is that,whereas the IMF and The World Bank have been frequently and conspicuouslyin the public eye from birth, the BIS has adopted a low profile and remaineduncommunicative. This was an expedient tactic for the latter to adopt - fortwo reasons: (1) it thus eluded any investigation into its previous financialdealings with the Third Reich; and (2) more importantly, by so diassociatingitself from the IMF and World Bank, the latter would henceforth be widely(though erroneously) regarded as the sole guardians of the worldwide economy,thus allowing the BIS more latitude to follow the agenda set by the corporateestablishment - to whom, it must be recalled, they owed their survival.

This ambivalent relationship between the IMF/World Bank vis-a-vis theBIS/commercial banks in the 70's is epitomised by Anthony Sampson in hisbook "The Money Lenders": "The commercial banks in the meantime had createda very different perspective, for the IMF now controlled much less of theworld's money. In 1966, the quotas which made up its capital amounted to10% of the total world imports; but by '76 they made up only 4%"..."by '76world annual deficits had reached $75 billion : of this, 7% financed by theIMF; 18% by other official international bodies (governments and World Bank)- remaining three-quarters financed by banks (commercial)". (Today, sometwo-and-a-half decades later, the board members of BIS, between them, control95% of the money in circulation). The reason for this apparent taking overof such responsibility by the BIS from the IMF/World Bank is twofold: (1)the collapse of the Bretton Woods system of exchange convertibility in theearly seventies exposed the irrelevance of the latter as agents for Europeanreconstruction; and (2) the latter being statutorily-appointed agents ofthe UN, were therefore - ostensibly - accountable to a much wider constituencythan the BIS, and therefore politically less manageable by the corporateestablishment, whose primary aim in the aftermath of World War 2 was to ensurethe unrestricted flow of American capital into Europe. A flow considerablyeased by subsequent European integration, in which both NATO and the Bilderbergplayed a crucial role. This aim was furthered by means of the USCongressionally-authorised European Cooperation Act (ECA) of 1948, andimplemented by its subsidiary, the European Payments Union (EPU) of 1950- both under the aegis of the Marshall Plan of 1947. Predictably, the BISwas the institution chosen by the EPU to oversee this movement of capital(a point worthy of note here is that the head of the EPU at that time wasone Richard Bissell, an economist who, years later, was to be the CIA DeputyDirector of Planning overseeing the Bay of Pigs fiasco in April '61!).TheBIS was now firmly ensconced in the heart of European integration, and wassubsequently to play a critical role in the events leading to its (Europe's)eventual evolvement into the European Union, a bureaucratic politico-economicbody occupying a position of crucial importance within the wider global hierarchyenvisaged by the corporate establishment.

The significance of the American's key central role in this sequence of eventsis underscored by the fact that, in the aftermath of World War 2, they (theAmericans) set up the Bundesbank in Frankfurt (in their zone of control),ensuring that the bank would be independent of government and follow a strictmonetary policy - in effect, another Federal Reserve System. In 1948 theyreplaced the existing Reichmarks with approximately 11 billion Deutschmarks,and Germany's subsequent conduct vis-a-vis European integration must be viewedwith this in mind. In any case, the fact remains that Germany's subsequentfrequent delaying tactics enabled the dollar to consolidate its dominance.

In their published précis entitled "Profile of an InternationalOrganisation", the BIS states that its "predominant tasks are summed up mostsuccintly in part of Article 3 of its original Statutes. They are 'to promotethe co-operation of central banks and to provide additional facilities forinternational financial operations'". To achieve this aim it has 3 administrativebodies: (1) a Board of Directors, comprising the Governors of the centralbanks of Belgium, France, Germany, Italy, the UK and the USA, each of whomappoints another member of the same nationality - plus the central bank Governorsof Canada, Japan,Holland, Sweden and Switzerland: a total of 17. (2) A ManagementBoard; and (3) An annual General Meeting in June of each year.

That this is an organisation carrying enormous clout is readily confirmedby a closer look at said synopsis, pertinent quotes from which follow (italicsare BIS's):

(A) "Since September 1994, the eleven countries from which the members ofthe Bank's Board of Directors are drawn have been identical with the countrieswhich comprise the Group of Ten (G-10), with which the BIS has had a longand close association".

(B) "As well as making resources available to the IMF under the GAB (GeneralArrangements to Borrow) the G-10 has, since 1963, been a principal forumfor discussion of international monetary questions. From the outset, theBIS has been a participant in G-10 Meetings, above all because the Governorsof the G-10 central banks meet regularly on the occasion of the Basle monthlymeetings. The G-10 meetings have, over time, become the pivotal forum inwhich much wider activities have been set in motion by the G-10 central banksin the pursuit of financial stability". (Meetings, it should be noted, hostedby the BIS in their high-rise office block in Basle).

(C) "As early as 1971 concern among central banks about the evolution ofthe Eurocurrency markets led to the establishment of a Standing Committeeof the Group of Ten central banks which has met periodically in Basle eversince"

(D) In December 1994 the G-10 Governors set up "The Basle Committee on BankingSupervision, the secretariat for which is provided by the BIS".

(E) "The BIS hosts meeting of, and provides the secretariat for, the Committeeon Payment and Settlement Systems and its various working parties".

(F) "..the BIS in a joint initiative with the Basle Committee on BankingSupervision is establishing an Institute for Financial Stability ahich isexpected to commence its activities sometime in the second half of this year"(1998).

(G) " From 1964 until the end of 1993 the BIS hosted the Secretariat of theCommittee of Governors of the Central Banks of the Member States of the EuropeanEconomic Community (theCommittee of Governors). From 1st of June 1973 untilthe end of 1993 the Secretariat of the Committee of Governors also servedthe Board of Governors of the European Monetary Co-operation Fund (EMCF)and the Bank (BIS) acted as EMCF agent. Until they were replaced by the EuropeanMonetary Institute on 1st January 1994, the Committee of Governors and theEMCF were the Community bodies which provided the institutional frameworkfor monetary co-operation in the European Community".

(It should be added that the above quotes are by no means a comprehensivelisting in the synopsis of the BIS's activities on the global scene).

Three news items concerning the role played by the BIS are worthy of note:

Alfred Mendez' Bankers' Network chart proved impossible to transfer to a web page so it is available here as a Microsoft Word 6 file - a Rich Text file - and an Adobe Acrobat file - so you can print it out.

BIBLIOGRAPHY

DAVIES, Glyn "A History of Money" (University of Wales '94)

DEDMAN, Martin "The Origins & Development of the European Union - '45to '95 (Routledge '96)

HIGHAM, Charles "Trading With The Enemy" (Robert Hale '83)

MARSHALL, Matt "The Bank" (Random House '99)

SAMPSON, Anthony "The Money Lenders" (Hodder & Stoughton '81)

BIS Précis '98

INTERNET (Membership lists, etc.)

Alfred Mendez <alfred.mendes@virgin.net>

http://www.spectrezine.org

The "big five" prime banks of Wall Street, the owners of the "Class A" stockof the NewYork Federal Reserve Bank, are: Chase-Manhattan, Citibank, GuarantyTrust, Chemical/Manufacturers-Hannover, and Bankers' Trust. The Class A stockof the Federal Reserve has not been sold or traded on the open market sinceit was hermetically sealed from the public at the end of the summer of 1914.It is the exclusive property of Wall Street and European prime banks, whosemajor stockholders are the trans-Atlantic Ruling Class. This pattern holdstrue of Central Banks throughout the nations of the advanced capitalist sector.The Big Five have interlocking directorates with the "Seven Sisters," theAnglo-Dutch-American oil cartels: Exxon, BP (British Petroleum), Dutch-RoyalShell, Texaco, Mobil, Gulf, and Standard Oil of California (SOCAL).

Several of these trans-Atlantic money and commodity cartels financed Mussoliniand Hitler and actively maintained their connections with the Reich throughoutWorld War II. They were also all actively involved in Stalin's Russia bythe beginning of the first Five Year Plan in 1928. None of this is reallysecret-anyone can discover the facts by doing a little research. Nor shouldit be considered a "conspiracy" (either by those who promote or deny theessential facts of the matter) - bankers and businessmen have been "tradingwith the enemy" for centuries. It is just one more example of "the wiseinvestment policy" of cartels like J.P. Morgan and Co. and Standard Oil ofNew Jersey.

Global Financial Centre - B.I.S.

The seat of first world finance capital is Basel, Switzerland, where theCentral Banks of the Group of Seven (G-7) form the directorate of the Bankfor International Settlements (BIS). The G-7 include Britain, France, Germany,Italy, Canada, the U.S., and Japan. The G-7 are called the "Hard CurrencyCountries" because their Central banks, corporations privately owned by thePrime Banks of these nations, have acquired most of the mined, milled, andingotted gold of the world. Approximately 80 percent of this is in the vaultsof Credit Suisse, under the Berghoff, the airport in Zurich. A somewhat largerformation, called the G-10, includes Belgium, Holland, and Sweden.

The U.S. has become the greatest debtor nation on earth because the PrimeBanks of the other nations of the G-10 (especially Britain, Holland, andJapan) have purchased the U.S. government debt in the form of semi-annualand tax-exempt U.S. Treasury Securities through the operations of the FederalOpen Market Committee, the Fed's window on Wall Street.

Of these U.S. Treasury Securities, 95% have been floated since the end ofWorld War II to finance the Cold War against the "Evil Empire." Now Communismhas been deflated as an enemy; nativist fascist movements are being pumpedup all around the globe and the aggregate Debt is approaching the net worthof all the real estate and movables on the planet. Now, also, the U.S. andRussia are joining their military and space programs, the U.S. is becomingby degrees a full-blown totalitarian state, and the bankers are beginningto foreclose upon the bankrupted minions and dupes within their new globalcondominium.

The World Central Bankers' Bank

The Bank for International Settlements (BIS), the "first beast", was foundedin 1930 and was the first entity to be called a "World Bank." Monetaristand gold-based, it functions as a clearing house for the balance of paymentsbetween nations. It operated throughout WWII as an interlocking directorateand a clearinghouse for joint Allied and Axis high finance.

The World Bank/International Monetary Fund (IMF), the "Second Beast," wasfounded in 1946, after being drafted at Bretton Woods, New Hampshire, duringthe war in 1944. The IMF functions as the collection agency for the WorldBank, much as the IRS functions as the collection agency for the FederalReserve Bank. The Wall Street branch of the Federal Reserve is the "fiscalagent" for the IMF in the USA. The capital pool of the IMF consists of thePrime Banks of the First World, which interlock with the First World (G-7)military-industrial complexes and the oil conglomerates.

The IMF functions under the aegis of the United Nations, as a Keynesian papercredit-mill, extending credit in the form of Special Drawing Rights (SDRs)to the Second and Third World debtor nations, requiring that they purchasespecified amounts of the currency of the G-7 nations, imposing "austerityterms" upon their internal economies, and looting them by means of "repaymentschedules" of their natural resources and minerals. These are channeled throughthe General Agreement on Tariffs and Trade (GATT) to the multinational cartels,also headquartered in Geneva, Switzerland.

With the implementation of NAFTA and the Uruguay Round of GATT, the realwages of blue and white collar workers in the U.S. will be leveled in timeto near parity with the Third World. The last "Superpower," the United States,is not the primary head of the G-7 Beast, but is, owing to its debtor status,the last head, appropriately close to the horned tail, engagingdisproportionately in UN Security Council "police actions" around the globe.

International Capital, having gone "global," will increasingly employ theblue-helmeted troops of the UN to enforce the hegemony of Capital in thefuture.

Mark Evans
North Coast HOME
Electrons to the Editor

Board of Directors

UrbanBäckström, Stockholm (Chairman of the Board of Directors,President of the Bank)

LordKingsdown, London (Vice-Chairman)

VincenzoDesario, Rome;

DavidDodge, Ottawa;

AntonioFazio, Rome;

SirEdwardAJGeorge, London;

AlanGreenspan, Washington;

HervéHannoun, Paris;

MasaruHayami, Tokyo;

WilliamJMcDonough, NewYork;

GuyQuaden, Brussels;

Jean-PierreRoth, Zürich;

HansTietmeyer, FrankfurtamMain;

Jean-ClaudeTrichet, Paris;

AlfonsVicomteVerplaetse, Brussels;

NoutHEMWellink, Amsterdam;

ErnstWelteke, FrankfurtamMain

Alternates

BrunoBianchi or StefanoLoFaso, Rome;

RogerWFerguson or KarenHJohnson, Washington;

Jean-PierrePatat or Marc-OlivierStrauss-Kahn, Paris;

IanPlenderleith or CliffordSmout, London;

PeterPraet or JanSmets, Brussels;

JürgenStark or StefanSchönberg,FrankfurtamMain

Senior Officials

AndrewCrockett, General Manager

AndréIcard, Deputy General Manager

GunterDBaer, Secretary General, Head of Department

WilliamRWhite, Economic Adviser, Head of Monetary and EconomicDepartment

RobertDSleeper, Head of Banking Department

RenatoFilosa, Manager, Monetary and Economic Department

MarioGiovanoli, General Counsel, Manager

GünterPleines, Deputy Head of Banking Department

PeterDittus, Deputy Secretary General

JosefToÆovský, Chairman, Financial Stability Institute

Representative Office for Asia and the Pacific

GeorgePickering, Chief Representative

Others

Carlo Azeglio Caiampi -Italian politician

Lamberto Dini - Italian politician and banker -board of directors BIS

Antonino Occhiuto Italian central banker - BIS 1975 - now

Tommaso Padoa-Schioppa - Italian central banker - BIS 1993 - now

From: 'Trading With The Enemy, How the Allied multinationals supplied Nazi Germany throughout World War Two' - By Charles Higham - pub. Robert Hale, London - 1983 - ISBN 0 7090 10230

[there are some minor typographical errors in this transcription]

On a bright May morning in 1944, while young Americans were dying on theItalian beachheads, Thomas Harrington McKittrick, American president of theNazi-controlled Bank for International Settlements in Basle, Switzerland,arrived at his office to preside over a fourth annual meeting in time ofwar. This polished American gentleman sat down with his German, Japanese,Italian, British, and American executive staff to discuss such importantmatters as the $378 million in gold that had been sent to the Bank by theNazi government after Pearl Harbor for use by its leaders after the war.Gold that had been looted from the national banks of Austria, Holland, Belgium,and Czechoslovakia, or melted down from the Reichsbank holding of the teethfillings, spectacle frames, cigarette cases and lighters, and wedding ringsof the murdered Jews.

The Bank for International Settlements was a joint creation in 1930 of theworld's central banks, including the Federal Reserve Bank of New York. Itsexistence was inspired by Hjalmar Horace Greeley Schacht, Nazi Minister ofEconomics and president of the Reichsbank, part of whose early upbringingwas in Brooklyn, and who had powerful Wall Street connections. He was secondedby the all important banker Emil Puhl, who continued under the regime ofSchacht's successor, Dr. Walther Funk.

Sensing Adolf Hitler's lust for war and conquest, Schacht, even before Hitlerrose to power in the Reichstag, pushed for an institution that would retainchannels of communication and collusion between the world's financial leaderseven in the event of an international conflict. It was written into the Bank'scharter, concurred in by the respective governments, that the BIS shouldbe immune from seizure, closure or censure, whether or not its owners wereat war. These owners included the Morgan-affiliated First National Bank ofNew York (among whose directors were Harold S. Vanderbilt and Wendell Willkie),the Bank of England, the Reichsbank, the Bank of Italy, the Bank of France,and other central banks. Established under the Morgan banker Owen D. Young'sso-called Young Plan, the BIS's ostensible purpose was to provide the Allieswith reparations to be paid by Germany for World War I. The Bank soon turnedout to be the instrument of an opposite function. It was to be a money funnelfor American and British funds to flow into Hitler's coffers and to helpHitler build up his machine.

The BIS was completely under Hitler's control by the outbreak of World WarII. Among the directors under Thomas H. McKittrick were Hermann Shmitz, headof the colossal Nazi industrial trust I.G. Farben, Baron Kurt von Schroder,head of the J.H. Stein Bank of Cologne and a leading officer and financierof the Gestapo; Dr. Walther Funk of the Reichsbank, and, of course, EmilPuhl. These last two figures were Hitler's personal appointees to the board.

The BIS's first president was the smooth old Rockefeller banker, Gates W.McGarrah, formerly of the Chase National Bank and the Federal Reserve Bank,who retired in 1933. His successor was the forty-three-year-old Leon Fraser,a colorful former newspaper reporter on the muckraking NewYork World, astreet-corner soapbox orator, straw-hat company director, and performer indrag in stage comedies. Fraser had little or no background in finance oreconomics, but he had numerous contacts in high business circles and a passionatededication to the world of money that acknowledged no loyalties or frontiers.In the first two years of Hitler's assumption of power, Fraser was influentialin financing the Nazis through the BIS. When he took over the position ofpresident of the First National Bank at its Manhattan headquarters in 1935,he continued to exercise a subtle influence over the BIS's activities thatcontinued until the 1940s.

Other directors of the Bank added to the powerful financial group. VincenzoAzzolini was the accomplished governor of the Bank of Italy. Yves Breartde Boisanger was the ruthlessly ambitious governor of the Bank of France;Alexandre Galopin of the Belgian banking fraternity was to be murdered in1944 by the Underground as a Nazi collaborator.

The BIS became a bête noire of U.S. Secretary of the Treasury HenryMorgenthau, a deliberate, thorough, slow-speaking Jewish farmer who, despite,his origins of wealth, mistrusted big money and power. A model of integrityobsessed with work, Morgenthau considered it his duty to expose corruptionwherever he found it. Tall and a trifle ungainly, with a balding high-domedhead, a high-pitched, intense voice, small, probing eyes, pince-nez, anda nervous, hesitant smile, Morgenthau was the son of Woodrow Wilson's ambassadorto Turkey in World War I. He learned early in life that the land was hisanswer to the quest for a decent life in a corrupt society. He became obsessedwith farming and, at the age of twenty-two, in 1913, borrowed money formhis father to buy a thousand acres at East Fishkill, Dutchess County, NewYork, in the Hudson Valley, where he became Franklin D. Rossevelt's neighbor.During World War I he and Roosevelt formed an intimate friendship. ElinorMorgenthau became very close to her near namesake, Eleanor Roosevelt. WhileRoosevelt soared in the political stratosphere, Morgenthau remained rootedin his property. In the early 1920s he published a newspaper called The AmericanAgriculturist that pushed for government credits for farmers. When Rooseveltbecame governor of New York in 1928, he appointed Morgenthau chairman ofthe Agricultural Advisory Commission. Morgenthau showed great flair and apassionate commitment to the cause of the sharecropper.

Legend has it that on a freezing winter day in 1933, FDR and Morgenthau metand talked on the borderline of their two farms. Morgenthau is supposed tohave said to Roosevelt, "Life is getting slow around here". And FDR replied,"Henry, how would you like to be Secretary of the Treasury?"

What he lacked in knowledge of economics, Morgenthau rapidly made up in hisJeffersonian principles and role as keeper of the public conscience. Closeto a thousand volumes of his official diaries in the Roosevelt Memorial Libraryat Hyde Park give a vivid portrait of his inspired conducting of his highoffice. He was aided by an able staff, which he ran with benign but militaryprecision. His most trusted aide was his Assistant Secretary, Harry DexterWhite. Unlike Morgenthau, White came form humble origins. Jewish also, hewas the child of penniless Russian immigrant parents who were consumed witha hatred of the czarist regime. White's early life was a struggle: this short,energetic, keen-faced man fought to help his father's hardware business succeed,finally forging as an economist with the aid of a Harvard scholarship anda professorship at Lawrence College, Wisconsin. He was opinionated andself-confident to a degree. Although he was frequently accused of being acommunist sympathizer, he was in fact simply an old-fashioned liberal drivenby his ancestral memories of Russian imperialism.

It is unfortunate that Morgenthau did not appoint White as his representativeat BIS meetings, but White was too valuable in Washington. Instead, Morgenthausent the more questionable Merle Cochran to investigate the BIS. Cochranwas on loan to Treasury from the State Department; he represented the StateDepartment's sophisticated neutralism before (and during) the war. Cochranbecame Secretary of the American Embassy in Paris, working directly underRoosevelt's friend the duplicitous, Talleyrand-like Ambassador William Bullitt.Cochran spent most of his time in Basle conveying to both Morgenthau andCordell Hull details of what the BIS was up. Very much opposed to White-indeed, violently so- Cochran was sympathetic with the BIS and to the Nazis,as his various memoranda made clear. Morgenthau took Cochran's politicaljudgements with a degree of skepticism, but continued to use him over White'sobjections because he knew the Germans would trust Cochran and confide muchin him. Day after day, Cochran lunched with Schmitz, Shroder, Funk, EmilPuhl, and the other Germans on the BIS board, obtaining a clear picture ofthe BIS's plans for the future.

In March 1938, when the Nazis marched into Vienna, much of the gold of Austriawas looted and packed into vaults controlled by the Bank for InternationalSettlements. The Nazi board members forbade any discussion of the transactionat the BIS summit meetings in Basle. Cochran, in his memoranda to Morgenthau,failed to score this outrageous act of theft. The gold flowed into the Reichsbankunder Funk, in the special charge of Reichsbank vice-president and BIS director,Emil Puhl. On March 14, 1939, Cochran wrote to Morgenthau, "I have knownPuhl for several years, and he is a veteran and efficient officer." He alsopraised Walther Funk.

His timing was not good. One day later, Hitler followed his forces into Prague.The storm troops arrested the directors of the Czech National Bank and heldthem gunpoint, demanding that they yield up $48 million gold reserve thatrepresented the national treasure nounced that they had already shifted thegold to the BIS with instructions that it be forwarded to the Bank of England.This was an act of great naiveté. Montagu Norma, the eccentric,Vandykebearded governor of the Bank of England, who liked to travel the worlddisguised as Professor Skinner in a black opera cloak, was a rabid supporterof Hitler.

On orders from their German captors, the Czech directors asked the DutchBIS president, J.W. Beyen, to return the gold to Basle. Beyen held an anxiousdiscussion with BIS general manager Roger Auboin of the Bank of France. Theresult was that Beyen called London and instructed Norman to return the gold.Norman instantly obliged. The gold flowed into Berlin for use in buying essentialstrategic materials toward a future war.

There the matter might have been buried had it not been for a young , verybright, and idealistic London journalist and economist named Paul Einzig,who had been tipped off to the transaction by a contact at the Bank of England.He published the story in the Financial News. The story caused a sensationin London. Einzig held a hasty meeting with maverick Labour Member of ParliamentGeorge Strauss. Strauss through Einzing began investigating the matter.

Henry Morgenthau telephoned Sir John Simon, British Chancellor of the Exchequer,on a Sunday night in an effort to determine what was going on. Merle Cochranhad telegraphed him with a characteristic whitewash of the BIS and an outrightdismissal of Einzig's charges that the BIS was a Nazi outfit. Sir John saidicily on the transatlantic wire, "I'm in the country, Mr. Secretary. We areenjoying our dinner. It is not our custom to do business by telephone."

"Well, Sir John," Morgenthau replied, "we've been doing business by telephoneover here for almost forty year!"

Sir John Simon continued to dodge Morgenthau's questions. On May 15, GeorgeStrauss asked Prime Minister Neville Chamberlain, "It is true, sir, thatthe nation treasure of Czechoslovakia is being given to Germany?" "It isnot," the Prime Minister replied. Chamberlain was a major shareholder inImperial Chemical Industries, partner of I.G. Farben whose Hermann Shcmitzwas on the board of the BIS. Chamberlain's reply threw the Commons into anuproar Einzig refused to let go. He was convinced that Norman had transferredthe money illegally in collusion with Sir John Simon. Simon, in answer toa question from Strauss, denied any knowledge of the matter.

Next day, Einzing tackled Sir Henry Strakosch, a prominent political figure.Strakosch refused to disclose the details of the conversation he had hadwith Simon. But Strakosch finally cracked and admitted that Simon had discussedthe transfer of the Czech gold.

Einzig was jubilant. He called Strauss with the news. Strauss put a furtherquestion to Sir John Simon in a debate on May 26. Once again, Simon hedged.Winston Churchill was the leader of a violent onslaught on the unfortunateChancellor of the Exchequer.

Morgenthau demanded to know more. Cochran's letter from Basle dated May 9and received May 17 brushed over the issue once more. Cochran wrote,

There is an entirely cordial atmosphere at Basle; most of the central bankers have known each other for many years, and these reunions are enjoyable as well as profitable to them. I have had talks with all of them. The wish was expressed by some of them that their respective statesmen might quit hurling invectives at each other, get together on a fishing trip with President Roosevelt or to the World's Fair, overcome their various prides and complexes, and enter into a mood that would make comparatively simple the solution of many of the present political problems.

This picture of good cheer scarcely convinced Morgenthau. On May 31, AssociatedPress reported from Switzerland that transactions were completed betweenthe BIS and the Bank of England and the Czech gold was now firmly in Berlin.

During World War II, Einzig, who had never forgotten the Czech gold affair,ran into J.W. Beyen in London and asked him if he would now admit what hadtaken place. Beyen said smoothly, "It is all technical. The gold never leftLondon." Einzig was amazed. He wrote an apology to Beyen in his book of memoirs,In the Center of the Things.

The truth was that the gold had not had to leave London in order to be availablein Berlin. The arrangement between the BIS an its member banks was thattransactions were not normally made by shipments would show up counts. Thus,all Montagu Norman had to do was to authorize Beven and replace the sameamount from the Czech National Bank holdings in London.

By 1939, the BIS had invested millions in Germany, while Kurt von Schroderand Emil Puhl deposited large sums in looted gold in the Bank. The BIS wasan instrument of Hitler, but its continuing existence was approved by GreatBritain even after that country went to war with Germany, and the Britishdirector Sir Otto Niemeyer, and chairman Montagu Norman, remained in officethroughout the war.

In the middle of the Czech gold controversy, Thomas Harrington McKittrickwas appointed president of the Bank, with Emil Meyer of the Swiss NationalBank as chairman. White-haired, pink-cheeked, smooth and soft-spoken, McKittrickwas a perfect front man for The Fraternity, an associate of the Morgans andan able member of the Wall Street establishment. Born in St. Louis, he wentto Harvard, where he edited the Crimson, graduating as bachelor of arts in1911. He worked his way up to become chairman of the British-American Chamberof Commerce, which numbered among its members several Nazi sympathizers.He was a director of Lee, Higginson and Co., and made substantial loans toGermany. He was fluent in German, French and Italian. Though he spent allof his career inland, he wrote learned papers on the life and habits of seabirds.His wife, Marjorie, and his four pretty daughters, one of whom was at Vassarand a liberal enemy of the BIS, were popular on both sides of the Atlantic.

Early in 1940, McKittrick traveled to Berlin and held a meeting at the Reichsbankwith Kurt von Schröder of the BIS and the Gestapo. They discussed doingbusiness with each other's countries if war between them should come.

Morgenthau grew more aggravated by McKittrick and the BIS as the war in Europecontinued, but did not insist he be withdrawn. He was forced to reply uponTreasury Secret Service reports rather than upon Cochran for informationon the BIS's doings. He learned that in June 1940, Belgian BIS director AlexandreGalopin had intercepted £228 million in gold sent by the Belgian governmentto the Bank of France and had shifted it to Dakar in North Africa and thencethe Reichsbank and Emil Puhl.

The Bank of Belgium's exiled representatives in New York sued the Bank ofFrance, represented by New York State Senator Frederic Coudert, to recovertheir gold. Ironically, they were represented by John Foster Dulles, whoselaw firm, Sullivan and Cromwell, had represented I.G. Farber. The SupremeCourt ruled in favor of the Bank of Belgium, ordering the Bank of Franceto pay out from its holdings in the Federal Reserve Bank.

But when Hitler occupied all of France in November 1942, State Senator Coudertstepped in with the excuse that since Germany had absorbed the Bank of France,that bank no longer had any power of appeal against the verdict. He pretendedthat contact with France was no longer possible, while fully aware of thefact that he himself was still retained by the Bank of France. He claimedthat only a Bank of France representative could allow the release of fundsfrom the Federal Reserve Bank. As a result, the gold remained in Nazi hands.

On May 27, 1941, Secretary of State Cordell Hull, at Morgenthau's suggestion,telegraphed U.S. Ambassador John G. Winant in London asking for a reporton the continuing relationship between the BIS and the British government.It infuriated Morgenthau that Britain remained a member of a Nazi-controlledfinancial institution: Montagu Norman and Sir Otto Niemeyer of the Bank ofEngland were still firmly on the board. Winant had lunch with Niemeyer ofthe Bank He gave an approving report of the meeting on June 1.

Niemeyer had said that the BIS, "guaranteed immunity from constraint in timeof war" , was still "legal and intact." He admitted that Britain retainedan interest in the Bank through McKittrick twenty-one months after war hadbroken out. He said that he was in touch with the Bank through the BritishTreasury and that British Censorship examined all of the mail by his ownwish. Asked about the issue of the Czechoslovakian gold, Niemeyer admitted,"Yes, it had a bad public press. However, that was due to the mishandlingof the question in Parliament." He further admitted that the government ofGreat Britain was still a client of the Bank and had accepted a dividendfrom it. The dividend, it scarcely needs adding, came largely from Nazi sources.Niemeyer said that he believed the British should continue the associationfor the duration as well as lend the Bank their tacit approval, "If onlyfor the reason that a useful role in post-war settlements might later havean effect."

Niemeyer went on, "It would be of no use at this time of raise difficultlegal questions with respect to the relationship of the various countriesoverrun by the Germans.... McKittrick should stay in Switzerland becausehe is ... guardian of the Bank against any danger that might occur... McKittrickmight want to get in touch with the American Minister in Switzerland andexplain his problem to him."

On July 13, 1941, Ivar Rooth, governor of the Bank of Sweden, wrote to hisfriend Merle Cochran- who had returned to Washington- about the latest generalmeeting of the Bank and the luncheon at the Basle restaurant Les Trois Roisafterward. He said that it was agreed at lunch that McKittrick should soontravel to the United State to explain BIS's position to "your American friends...[in the] very correct and neutral way." Rooth continued, "I hope thatour friends abroad will understand the political necessity of committingthe Germans to send a division to Finland by railway through Sweden."

On February 5, 1942, almost two months after Pearl Harbour, the Reichsbankand the German and Italian governments approved the orders that permittedThomas H. McKittrick to remain in charge of the BIS until the end of thewar. One document of authorisation included the significant statement,"McKittrick's opinions are safely known to us." McKittrick gratefully arrangeda loan of several million Swiss gold francs to the Nazi government of Polandand the collaborative government of Hungary. Most of the board's memberstravelled freely across frontiers throughout the war for meetings in Paris,Berlin, Rome or (though this was denied) Basle. Hjalmar Schacht spent muchof the war in Geneva and Basle pulling strings behind the scenes. However,Hitler correctly suspected him of intriguing for the overthrow of the presentregime in favour of the Fraternity imprisoned him late in the war. From PearlHarbour on, the BIS remained listed in Rand McNally's directory as CorrespondentBank for the Federal Reserve Bank in Washington.

In London, Labour Member of Parliament George Strauss kept hammering awayat the BIS. In May 1942 he challenged Sir John Simon's successor, Chancellorof the Exchequer Sir Kingsley Wood, on the matter. Wood replied, "This countryhas various rights and interests in the BIS under our international trustagreements between the various governments. It would not be in our best interestto sever connections with the Bank."

George Strauss and other Labour members of Parliament insisted upon Knowingwhy the Bank's dividend was still being divided equally in wartime amongthe British, German, Japanese, and America banks. It was not until 1944 thatthey discovered Germany was receiving most of the dividends.

On September 7, 1942, Thomas H. McKittrick issued the Bank's first annualreport after Pearl Harbor. He went through the bizarre procedure of addressingan empty room with the report to be able to say to Washington that none ofthe Axis directors was present. In fact, all of the Axis directors receivedthe report soon afterward and the mixed executive staff of warring nationsdiscussed it through the rest of the day. The report was purely Nazi in content.It assumed an immediate peace in Germany's favour and a distribution of Americangold to stabilise the currencies of the United States and Europe. This wasa line peddled by every German leader starting with Schacht. When Strausstold the House of Commons on October 12 that the report had delighted Hitlerand Göring, Sir Kingsley asserted that he had not seen it. Strauss wenton, "It is clear some form of collaboration between the Nazis and the Alliesexists and that appeasem*nt still lives in time of war."

In the summer of 1942, Pierre Pucheu, French Cabinet member and directorof the privately owned Worms Bank in Nazi-occupied Paris, had a meeting atthe BIS with Yves Bréart de Boisanger. Pucheu told Boisanger thatplans were afoot for General Dwight D. Eisenhower to invade North Africa.He had obtained this information through a friend of Robert Murphy, U.S.State Department representative in Vichy. Boisanger contacted Kurt vonSchröder. Immediately, Shröder and other German bankers, alongwith their French correspondents, transferred 9 billion gold francs via theBIS to Algiers. Anticipating German defeat, they were seeking a killing indollar exchange. The collaborationists boosted their holdings from £350to £525 million almost overnight. The deal was made with the collusionof Thomas H. McKittrick, Hermann Schmitz, Emil Puhl, and the Japanese directorsof the BIS. Another collaborator in the scheme was one of the Vatican's espionagegroup who leaked the secret to others in the Hitler High Command- accordingto a statement made under oath by Otto Abetz to American a officials on June21, 1946.

In the spring of 1943, McKittrick, ignoring the normal restrictions of war,undertook a remarkable journey. Despite the fact he was neither Italian nordiplomat and that Italy was at war with the United States, he was issuedan Italian diplomatic visa to travel by train and auto to Rome. At the borderhe was met by Himmler's special police, who gave him safe conduct. McKittrickproceeded to Lisbon, whence he with immunity with immunity from U-boats bySwedish ship to the United States. In Manhattan in April he had meetingswith Leon Fraser, his old friend and BIS predecessor, and with the headsof the Federal Reserve Bank. Then McKittrick travelled to Berlin on a U.S.passport to provide Emil Puhl of the Reichsbank with secret intelligenceon financial problems and high-level attitudes in the United States.

On March 26, 1943, liberal Congressman Jerry Voorhis of California entereda resolution in the House of Representatives calling for an investigationof the BIS, including "the reasons why an American retains the position aspresident of this Bank being used to further the designs and purpose of Axispowers." Randolph Paul, Treasury counsel, sent up the resolution to the HenryMorgenthau on April 1, 1943, saying, "I think you will be interested in readingthe attached copy of [it]." Morgenthau was interested, but he made one ofhis few mistakes and did nothing. The matter was not even considered by Congress.

Washington State Congressman John M. Coffee objected and introduced a similarresolution in January 1944. He shouted, angrily, "The Nazi government has85 million Swiss gold francs on deposit in the BIS. The majority of the boardis made up of Nazi officials. Yet American money is being deposited in theBank."

Coffee pointed out that the American and British shareholders were receivingdividends from Nazi Germany and Japan and that the Germans and Japanese wrereceiving dividends from America. The resolution was tabled.

There the matter might have lain had it not been for an energetic Norwegianeconomist of part-German origin named Wilhelm Keilhau. He was infuriatedby Washington's continuing refusal to break with the Bank and its acceptanceof a flagrant alliance with its country's enemies.

Keilhau introduced a resolution at the International Monetary Conferenceat Bretton Woods, New Hampshire, on July 10, 1944. He called for the BISto be dissolved "at the earliest possible moment." However, pressure wasbrought to bear on him to withdraw a second resolution, and he was forcedto yield. The second resolution called for an investigation into the booksand records of the Bank during the war. Had such an investigation taken place,the Nazi-American connection would undoubtedly have been exposed.

Bankers Winthrop Aldrich an Edward E. (Ned) Brown of the American delegationand the Chase and First National banks tried feebly to veto Keilhau's resolution.They were supported by the Dutch delegation and by J.W. Beyen of Holland,the former president of BIS and negotiator of the Czech gold transference,despite the fact that Holland's looted gold had gone to the BIS. Leon Fraserof the First National Bank of New York stood with them. So, alas, did theBritish delegation, strongly supported by Anthony Eden and the Foreign Office.After initial support, the distinguished economist Lord Keynes was swayedinto confirming the British official opposition calling for a postponementof the Bank's dissolution until post-war- when the establishment of aninternational monetary fund would be completed. Keynes's wife, the formerLydia Lopokova, the great star of the Diaghilev Ballet who had made her debutopposite Nijinsky, was a member of wealthy czarist family who influencedher husband toward delaying the BIS's dissolution and a tabling of all discussionof looted gold- according to Harry Dexter White.

Dean Acheson, representing the State Department in the American delegation,was firmly in Winthrop Aldrich's camp as a former Standard Oil lawyer, smoothlyusing delaying tactics as the master of compromise he was. The minutes ofthe meetings between Morgenthau, Edward E. Brown, Acheson, and other membersof the delegation on July 18-19, 1944, at the Mount Washington Hotel at BrettonWoods show Acheson arguing for retention of the BIS until after the war.He used the spurious argument that if McKittrick resigned and the Bank wasdeclared illegal by the United States government, all of the gold holdingsin it owned by American shareholders would go direct to Berlin, via a Nazipresident. Acheson must surely have known that the gold was already depositedfor the Axis via the BIS partner, the Swiss National Bank, which shared thesame chairman. Acheson also argued that the Bank would help restore Germanypost-war. That at least was true.

Senator Charles W. Tobey of New Hampshire emerges with great credit fromthe minutes of the meetings at the Mound Washington. At the July 18 meetinghe said, savagely, to the company in general, "What you're doing by yoursilence and inaction is aiding and abetting the enemy". Morgenthau agreed.Acheson, rattled, said that the BIS must go on as "a matter of foreign policy."At least there was a degree of honesty in that. Morgenthau felt that theBIS "should be disbanded because to disband it would be good propaganda forthe United States".

There were jocular moments during the discussion on July 19. Dr. Mabel Newcomerof Vassar said that she "would not dissolve the Bank." Morgenthau asked hercheerfully whether McKittrick's daughter was one of her students. She repliedin the affirmative. Morgenthau said, "She has informed my daughter that sheis against the Bank". Dr. Newcormer replied, "She didn't inform me, exceptthat she wanted her father to come home- so she might favour the dissolution!"

Everyone laughed. Morgenthau said, "She is very cute. She has read this articlein PM about it, and she said [referring to an attack on the BIS in that liberalpublication] ' I think PM is right and father is wrong'." Morgenthau threwback his head and laughed again. "That is what Vassar does to those girls!"

Under pressures form Senator Tobey and form Harry Dexter White, Morgenthaustated that Leon Fraser, McKittrick, and Beyen all had sympathies "that runther." In other words, in the direction of Germany. He said,

I think in the eyes of the Germans, they would consider this as the king of thing which can go on, and it holds out to them a hope, particularly to people like Dr. Schacht and Dr. Funk, that the same [associations] will continue [between American and Germany] after the war. It strengthens the position of people like Mr. Leon Fraser and some very important people like Mr. Winthrop Aldrich, who have openly opposed this dissolution.

Dean Acheson, fighting hard with Edward E. Brown at his side, said he "wouldhave to take the matter up with Cordell Hull." He was sure Hull would wantthe BIS retained the since Hull had approved its existence up till now.Morgenthau promised to call Hull, who had become acutely embarrassed by presscriticism. After four years of tacitly approving the BIS, Hull told Morgenthauhe called for its dissolution Morgenthau telephoned him and said, "What aboutMcKittrick?" Hull replied icily, "Let him read about it in the papers!" Later,he repeated angrily to Acheson, "Let him read about it in the papers!"

Acheson went to see the British delegation on July 20. Closely connectedto high-level politicians in England, he was well regarded in Whitehall.Lord Keynes felt that the BIS might be too quickly abolished if Acheson werebeaten by the Morgenthau faction. Although Keynes was advanced in years andhad a heart condition, he and his wife abruptly left a British summit meetingand, finding the elevator jammed with conferences, ran up three flights ofstairs and knocked on the Morgenthaus' door. Elinor Morgenthau was astonishedto see the normally imperturbable British economist trembling, red-faced,and sweating with rage.

Keynes repeated, as calmly as he could, that what he was upset about wasthat he felt that the BIS should be kept going until a new world bank andan international monetary fund were set up. Lady Keynes also urged Morgenthauto let the Bank go on. Finally, Keynes, seeing that Morgenthau was underpressure to dissolve the BIS, shifted his ground and took the position thatBritain was in the forefront of those who wanted the BIS to go- but onlyin good time. Morgenthau insisted the BIS must go "as soon as possible."At midnight an exhausted Keynes said he would go along with the decision.

Keynes returned to his rooms and contacted his fellow delegates from theForeign Office. The result of this late-night meeting was that he largelycompromised his original agreement and at 2 A.M. sent a letter by hand tothe Morgenthaus' suite again calling for the BIS to go on for the duration.

Next day, over the objections of Edward E. Brown and the great irritationof Dean Acheson, Morgenthau's delegation approved the disposal of the BIS.

Immediately after the liquidation of the BIS was voted, McKittrick did everythingpossible to combat it. He sent letters to Morgenthau and the Chancellor ofthe Exchequer, Sir John Anderson in London. He stated that when the war ended,huge sums would have to be paid to Germany by the Allies and the BIS wouldhave to siphon these through. There was no mention of the millions owed byGermany to the Allies and the conquered nations. Harry Dexter White senta memorandum to Morgenthau dated March 22, 1945, saying, "McKittrick's lettersare part of an obvious effort to stake out a claim for the BIS in the postwarworld. As such, they are, in effect, a challenge to Bretton Woods....Theother signatories to the Bretton Woods Act should be advised of the BIS action,should be reminded of Bretton Woods' resolution Number Five, and should beadvised that we are not answering the letters."

The same day, Treasury's indispensable Orvis A. Schimdt held a meeting withMcKittrick in Basle. His comment on McKittrick's remarks was sharp: "I wassurprised that a voluntary recital intended as a defense of the BIS couldbe such an indictment of that institution." When Schmidt asked McKittrickthe Germans had been willing to allow the BIS to be run as it had and hadcontinued to make payments to the BIS, McKittrick replied, "In order tounderstand, one must first understand the strength of the confidence andtrust that the central bankers had had in each other and the strength oftheir determination to play the game squarely. Secondly, one must realisethat in the complicated German financial setup, certain men who have theircentral bankers' point of view are in very strategic positions and can influencethe conduct of the German Government with respect to these matters."

McKittrick went on to say that there was a little group of financiers whohad felt from the beginning that Germany would lose the war; that after defeatthey might emerge to shape Germany's destiny. That they would "maintain theircontracts and trust with other important banking elements so that they wouldbe in a stronger position in the postwar period to negotiate loans forreconstruction of Germany."

McKittrick declined to name all save one of the little group, taking particularcare to hide the name of Kurt von Schröder. Since he had to name someone,he selected Emil Puhl. Nevertheless, he pretended that Puhl "does not sharethe Nazi point of view." Orvis Schmidt was not deceived by this. He knewperfectly well that it was Puhl who had authorized the looting of Alliedgold and its transferral to Switzerland and who had been talking to McKittrickthe day before in Basle about that very subject.

Schmidt closed in. He asked McKittrick whether he Knew what had happenedto the Belgian gold deposited in the Bank of France McKittrick replied: "Iknow where it is. I will tell you. But it is extremely important world doesnot leak out. It is in the vaults of the Reichsbank." Evidently he realizedhe had said too much: that he had let slip his own role in the transaction.He added hastily: "I'm sure it will be in Berlin when you get there. Puhlis holding it for return to the Belgians after the war." This barefaced liescarcely impressed Schmidt. The gold was already in Switzerland.

McKittrick did not end there. He admitted that the Germans had sent goldto the BIS and said, "When the war is over you'll find it all carefullysegregated and documented. Anything that' s been looted can be identified.When gold was offered to us, I thought it would be better to take it andhold it rather than to refuse it and let the Germans Keep it for other uses."

McKittrick continued, "I'm so sorry I can't ask you to take a look at thebooks and records of the Bank. When you do see them at the end of the war,you will appreciate and approve of the role that I and the BIS have playedduring the war." They were, of course, never released.

Orvis Schmidt went on to see the executives of the Swiss National Bank, whichmaintained its partnership in the BIS and shared the same chairman, ErnstWeber. Schmidt raised the question of the looted gold: the $378 million ingold of Belgium, Czechoslovakia, Holland, and other occupied countries, includingthe treasure of the Jews. He knew that by a technicality the BIS no longersiphoned the gold through directly but sent it to its associated earmarkedaccount at the Swiss National Bank.

The Swiss National Bank officials told Schmidt that in order to be sure theywere not obtaining looted gold, they had requested a member of the Reichsbank,whom they "regarded to be trustworthy," to certify that each parcel of goldthat they purchased had not been prised when the directors of the Swiss NationalBank informed him that that personage was none other than Emil Puhl, whohad just left ahead of his arrival . At the Nuremberg Trials in May 1946,Walther Funk, still listed as a BIS director, testified that Puhl had Americanconnections and had been offered a major post at Chase in New York shortlybefore Pearl Harbor. Funk admitted that Puhl was in charge of gold shipments.He admitted receiving the gold reserve of the Czech National Bank and theBelgian gold, and he added, "It was very difficult to pay [in foreign exchange]in gold .... Only in Switzerland could we still do business through changinggold into foreign currency." Funk said that Puhl had informed him in 1942that the Gestapo had deposited gold coins, and other gold, from the concentrationcamps, in the Reichsbank. Puhl had been in charge of this. Jewels, monocles,spectacle frames, watches, cigarette cases, and gold dentures had flowedinto the Reichsbank, supplied by Puhl from Heinrich Himmler's resources.They were melted down into gold bars; he did not add how many bars were markedfor shipment to Switzerland. Each gold bar weighed 20 kilograms. An affidavitwas read to Funk, signed by Puhl, confirming the facts. Puhl stated thatFunk had made arrangements with Himmler to receive the gold.

Funk unsuccessfully sought to disclaim responsibility for the scheme. Hedismissed Puhl's charges that the gold was plowed into a revolving fund.Faced with a film showing as many as seventy-seven shipments of gold teeth,wedding rings, and other loot at one time, he stuck his story. At one stagehe said that the loot was brought to the Reichsbank by mistake! His liesbecame so absurd that they were laughable. When prosecutor Thomas E. Doddsaid to him, "There was blood on this gold, was there not, and you knew thissince 1942?" Funk replied weakly, "I did not understand."

On May 15, 1946, Puhl took the witness stank. Puhl claimed that he had objectedto the shipments as "inconvenient" and "uncomfortable"- a curious description.He admitted that his "objections" were subordinated to the broader considerationof assisting the SS, all the more-and this must be emphasized- because thesethings were for the account of the Reich."

The prosecuting counsel read items from a report that included the statement,"One of the first hints of the sources of [the gold] occurred when it wasnoticed that a packet of bills was stamped with a rubber stamp, 'Lublin.'This occurred some time early in 1943. Another hint came when some itemsbore the stamp, 'Auschwitz.' We all knew that these places were the sitesof concentrations camps. It was in the tenth delivery, in November 1942,that dental gold appeared. The quantity of the dental gold became unusuallygreat."

In October 1945 the Senate Committee on Military Affairs produced furtherevidence of Puhl's activities. His letters to Funk from Switzerland in March1945 were read out. They showed his desperate and successful efforts to overcomethe effects of the mission that month headed by Lauchlin Currie and OrvisSchmidt. Puhl had constantly hammered away at McKittrick and the Swiss NationalBank in order to secure the flow of the looted gold of Europe. McKittrick,brutally exposed by the Bretton Woods Conference's Norwegian delegation,had- the letters showed- panicked, seeking to avoid direct receipt of thegold. Instead, the Swiss National Bank, as BIB shareholder, would take itinto its vaults. But in order to camouflage the receipt of it, since theSwiss National Bank had promised the Americans they would not receive it,the Swiss National Bank had disguised it as payments to the American RedCross and the German legations in Switzerland. There was a starkly ironicalhumour in this. General Robert C. Davis, head of the New York chapter ofthe American Red Cross, was also chairman of the part- Nazi network Transradio.As late as 1943, the German Legation in Berne was buying Standard Oil forits heating and automobiles, which were supplied and repaired by U.Ssubsidiaries. Tons of gold, thus laundered, poured into the Swiss NationalBank in those last months of the war.

In 1948, under great pressure from Treasury, the Bank for InternationalSettlements was compelled to hand over a mere £4 million in looted goldto the Allies.

Despite the fact that the evidence of the Puhl-McKittrick conspiracy wasoverwhelming, McKittrick was given an important post by the Rockefellersand Winthrop Aldrich: vice-president of the Chase National Bank, a positionhe occupied successfully for several years after the war. In 1950 he invitedEmil Puhl to the United States as his honoured guest. And the Bank forInternational Settlements, despite the Bretton Woods Resolutions, was notdissolved.

Chapter 1 - A Bank for All Reasons
From: 'Trading With The Enemy, How the Allied multinationals supplied Nazi Germany throughout World War Two' - By Charles Higham - pub. Robert Hale, London - 1983 - ISBN 0 7090 10230

By Smithy (e-mail:smithy@mindspring.com)

from http://www.wizardsofmoney.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. Gramm-Leach-Blily)
Global Financial Consolidation and "Too-Big-to-Fail" Risks
Addressing Causes of Financial Crises
Credit Creation for Low/Middle Income Groups and Predatory Lending
Non-Bank Financial Institutions

Need for Public Input

1.Introduction

The Basel Committee on Banking Supervision (BCBS)is a committee of bank supervisory authorities from the G10 (i.e. the wealthiest10 nations). They meet regularly at the Bank for International Settlementsin Switzerland and are in the process of putting together the internationalagreement known as the Basel Capital Accord (BCA). This sets bank supervision,risk-based capital and disclosure requirements for banks operatinginternationally. These concepts are described more fully in Sections 2 and3. The new BCA will effect the activities of all large international banks,and will probably be adopted by more than 100 countries.

While such an Accord might seem rather obscure andirrelevant to the general public, this is perhaps more a feature of the generalignorance, secrecy and complexity surrounding the operations of the internationalbanking and monetary systems than anything else. The purpose of this paperis to act as a discussion document to start gathering concerns from variousNGOs working on monetary/finance system issues so that more comments representingpublic interest issues can be submitted to the BCBS for its next commentperiod in 2002.

This Accord is of particular interest because of:

Increasing Power of International Creditors over Debtors. International banks affected by BCA create the bulk of the money we all use in day-to-day living, especially the US currency which is the backbone of the international monetary system. The power of international creditors, particularly those responsible for money creation in the US Dollar, over debtors is increasing. This, in combination with the collapse of the gold standard and the original Bretton Woods structure in 1971, as well as the trend for western corporations to seek financing outside the banking sector, has lead to increasingly reckless behavior of these bank creditors. This is especially true where they can exercise their "powers" to access "collateral" (real assets) crucial to less powerful debtors - e.g. through IMF Structural Adjustment Programs internationally, and through predatory lending and foreclosures domestically. Such activities are increasing income and wealth gaps globally. Good supervision of, and appropriate capital standards for, powerful creditors can help curtail this recklessness.
Increasing Financial Consolidation: Both domestic and cross-border consolidation of financial services companies is continuing to escalate in the wake of global financial deregulation and the collapse of banks in various countries after financial crises. This is leading to the emergence of huge global "financial empires" domiciled in the same G10 countries that create the "hard currency", dominate institutions such as the IMF and set the rules for international banking. Also, the bigger a financial corporation becomes the more it becomes "too-big-to- fail". Big creditors at the heart of the international financial system are very likely to get bailed out no matter what they do, for their collapse could collapse the entire global financial system. This creates a tremendous "moral hazard" proportional to size and global reach. This further increases the powers of large western creditors over sovereign nations.
Trends in Bank Supervision and Financial Convergence. The new BCA comes at a time of significant changes in the supervision of large banking operations. In the Western nations, over the past decade or so, we have seen insurance, banking and brokerage operations all merge together. One of the last countries to jump on this bandwagon was the United States with the Gramm-Leach-Bliley act of 1999. This made the Federal Reserve, the central bank of the United States, the new umbrella supervisor of financial conglomerates. The potential for conflicts of interest arising from the driver of monetary policy for the linchpin currency also regulating and supervising large financial players are enormous. Most other countries employ a fully separate government body for this regulatory role and one under democratic control. This strange move in the US could have significant worldwide impacts.
Moral Hazard Created by the IMF. The larger international banks affected by BCA also seem to be the primary beneficiaries of the IMF bailouts associated with many recent financial crises. IMF bailouts are the insurance provided by the general public if the risk-management strategies of large creditors (including the holding of risk-based capital) fail. In one sense strong risk-based capital requirements can provide an antidote to the increasing "moral hazard" created by the IMF bailouts. Risk-based capital can be used to prevent crises by forcing international creditors to take more responsibility for the risks they assume and this will help prevent the need for severe "cures". It forms a "capital charge" on banking institutions, similar in effect to what the Tobin Tax would do to international speculators in general. A charge on the banking sector is most crucial because they are the most likely to get bailouts.
Increasing Complexity of Financial Instruments. Convergence of financial players, increasing consolidation of wealth in fewer hands, hedging strategies and innovative regulatory avoidance have created whole new worlds of complex financial instruments. The regulators themselves are admitting that this makes it increasingly difficult to really understand what is going on at these financial conglomerates and, in fact, to regulate them. As we shall see, this is reflected extensively throughout the new BCA with the development that "sophisticated" banking operations will be able to set their own capital requirements to a very large extent. This may be the first step toward "self-supervision" of banks, which is especially dangerous as "too-big-to-fail" risks and dependence on IMF "cures" increase.
Domestic Predatory Lending and Credit Access for Low/Middle Income: Within the US, in the sub-prime market, banks have been incented to assess good credit risks (that should get a prime rate) as sub-prime because they could charge a higher interest rate without having to hold higher capital. Presently in the US extensive problems have emerged with respect to bank's activities in low and middle-income groups. Bank capital requirements should address such exploitation of the poor, and supervision requirements in general should address the whole issue of credit access on reasonable terms for low/middle income groups. These issues are not presently addressed at all in the existing BCA.

In the following sections I wish to unravel some ofthe main features of the Basel Capital Accord and highlight what I perceiveas some of the issues that the general public should be concerned about.In doing so I will attempt to relate the significance of BCA to theseabove-mentioned issues of global finance sector deregulation, mergers andacquisitions, IMF bailouts, low income credit access, bank supervision trends,and the general imbalance in creditor/debtor relations.

However it should be noted that I am making theseobservations and drawing conclusions based on public information analyzedusing skills acquired in my own training as an actuary who has been primarilyconcerned with the insurance industry throughout my career. In looking atthe banking sector extensive information about exactly what is going onunderneath is not easy to find in the public domain.

Based on public information it is not easy to fullyunderstand a bank's risk exposures and it has been widely acknowledged bymany bank industry watchers that this is a key part of the success of themonetary system. For the monetary system is no more than a confidence gameand this requires confidence in the banks at all times, especially thoseresponsible for the creation of the linchpin currency - the US Dollar.

This necessary "secrecy" surrounding the monetarysystem in order to keep confidence in the ($US driven) financial system probablyhas a lot to do with the secrecy that surrounds institutions like the IMF.Public information from the IMF does not reveal how bailout sums are determinedor what creditors are at the other end of the bailout packages. Nor do publicbank financial statements reveal such details. It is highly likely that themain beneficiaries of IMF bailouts are large western creditors with bankinglicenses (and therefore those "regulated" under BCA standards) since theseinstitutions sit closest to the heart of the international monetary system.Any large hit to their balance sheet is most likely to threaten global financialstability.

In no way do the opinions expressed herein reflectthe views of my employer nor the views of the professional actuarial societiesof which I am a member. In fact the International Actuarial Society, representingthese organizations, has submitted public comments on BCA that do not overlapat all with the concerns expressed herein. Nevertheless I consider it theduty of any professional to consider the broader public implications of thegoings on in their profession. My profession is built around the practiceof financial risk management and it is my opinion that the financial andother risks to the broader public of the global financial order are unacceptable,so this is why I write this paper. I do not consider this exercise to beinconsistent with my duty as an actuary to sound alarm bells when risks aregetting out of hand.

2.Backgroundto Development of Basel Capital Accord (BCA)

The first BCA came into existence in 1988. Moreinformation about the original Accord can be found at the web site of theBank for International Settlements (BIS) atwww.bis.org. The BIS is an internationalbank for central bankers, whose dominant members are the central banks (NOTgovernments) of the G-10 + Switzerland. More recently other countries' centralbanks have been able to join the BIS but it is dominated by the G-10. I cannotbe certain of all the things the BIS does but I think it is important tonote that this is the main place for the meeting of minds of the world'smost powerful central bankers. These meetings are conducted in private, asare the Federal Reserve's Open Market Committee and Federal Advisory Councilmeetings. No doubt, very key decisions about the international monetary system- the same monetary system we all depend on - are made behind these closeddoors.

The BCA of 1988, according to the BIS web site, cameout of the need to set consistent capital standards for international banksso that one country's banking sector would not have regulatory advantagesover another. A "behind-the-scenes look" would reveal that in the late 1980sthe US and other bank regulators saw the need to introduce better risk-basedcapital requirements in the wake of the emerging Savings and Loans Debacleand the Latin American Debt Crisis. In both crises the banks were holdingcapital way short of what the risk of default of their loans implied andthis ultimately led to the need for bailouts (from US public and Latin Americanpublic).

The BIS web site also states that the new BCA is comingout of a need to get away from "one size fits all" requirements, and theneed to better incorporate operational and market risks (to be discussedin Section 3) into capital requirements. They also state that "sophisticated"banks should be allowed to use their own internal risk management techniquesto set their own capital levels. A behind-the-scenes look reveals that thefinancial crises of the 1990's and subsequent IMF bailouts scared the heckout of those at the helm of the financial system. They found that the oldBCA did not have a sufficient capital charge for very risky cross-borderloans over that for safer ones. Hence many creditors were incented to engagein very risky cross-border financing which played a large role, not onlyin triggering the crisis, but also in all the trouble the western creditorsfound themselves in once the crisis emerged.

The meetings of the Basel Committee on Banking Supervision(BCBS), responsible for the BCA, are hosted by the BIS and are also conductedbehind closed doors. Public input into draft BCA documents has been welcomed,however, and this opportunity has certainly been utilized by the global financesector. So far the major groups of NGOs opposed to the Bretton Woods institutionsand the global financial order have not provided input and I am certain theBCBS is not expecting them to. Therefore it would be very nice to give themthe big surprise of public input from the members of the public who are notlarge, powerful financial players. This makes sense especially because thispublic is called upon to bailout banks whose capital can't cover theirrisks.

The latest "public" comment period ended on May31^st 2001. Due to the extensive complaints received from the bankingsector (who, of course, wish to hold less capital and be less supervised)the BCBS is saying that they will have another round of comments for another(more bank friendly, no doubt) revised draft in 2002. It is important tonote that the BCBS is currently chaired by William McDonough, the currentPresident of the Federal Reserve Bank of New York, and who therefore sitson the Federal Open Markets Committee - THE committee that determines monetarypolicy for the world's linchpin currency.

As noted, the BCBS is composed of central bankersfrom the G-10. This is a critical observation for several reasons. First,bank supervision standards are being set only by the wealthy countries thatcreate all the "hard currency". Second, bank supervision standards are beingset by those responsible for monetary policy, not by separate national governmentbodies responsible for bank supervision. The domination by central bankersin this process means that most of the input will come directly out of thebanking sector, rather than the general public or their electedrepresentatives.

In a better world a large part of the role of banksupervision would be to protect some balance of power between creditors anddebtors. Instead the large international banks seem to be moving into a worldwhere they are gaining more ability to "supervise themselves" and this willbecome more evident as we study BCA. The structure of the BCBS and its rolein producing the BCA is consistent with this observation.

In a much better world the actual process of moneyorigination would be democratic, which it is far from today. The realityis that we are stuck with the international monetary system based on theUS dollar because that is what people all over the world have placed theirconfidence and trust in. This is unlikely to change in any hurry, thoughbaby steps are being taken with the emergence of local currencies. In themeantime it makes sense to focus attention on the supervision of those withcredit creation powers in the dominant "trusted monetary system", regardlessof how unsavory this system and its major players have become.

It is important to note that BCA covers ONLY internationalbanking institutions. It does not cover non-bank financial institutions (NBFI).In one sense it is quite reasonable that banks should have tougher capitalrequirements and supervision standards on them for the followingreasons:

They have the special privilege of being able to "create money out of thin air", and must use that privilege responsibly else the safety of the whole financial system is put at risk.
They have various guarantees or bailout mechanisms backing them up such as FDIC funds and, of course, the IMF bailouts that nobody wants to give us too much information on.

However the emergence of the NBFIs poses a problemand this is giving the banks a lot of leverage in arguing against tough capitalrequirements. Basically NBFIs have emerged as a result of huge accumulationof financial capital into few hands and the development of new instrumentssuch as loan-backed securities. This means that large NBFIs without a bankinglicense (who do not create M3 money) can compete with bank financiers, sothey may have an advantage if banks have to comply with tougher capital andsupervision requirements.

Hence many banks are approaching the BCBS with thecomplaint that the BCA unfairly penalizes them for being a bank. Rather thanignoring these arguments on the basis that the banking sector has privilegedaccess to various bailout mechanisms that NBFIs dont, I fear that theBCBS may cave in to such arguments. Hence it is important for the concernedpublic to remind the BCBS of these things and this makes it even more importantto get access to the list of creditors benefiting from the IMF bailouts.

If NBFIs are also benefiting from these bailouts thenmaybe the solution is that NBFIs also need something similar to the BCA.In any case that would be recommended from the point of view of preventionof crises for tougher capital requirements help curtail speculativeactivity.

3.(VeryBrief) Overview of BCA Standards (seewww.bis.org/ )

The BCA contains what are known as the three pillarsof bank supervision. 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 loansto the non-bank public, including security holdings) over its liabilities(primarily deposits of the non-bank public).

Risk-based capital requirements demand that a bank'scapital (or equity) be at least as large as something specified as minimumcapital.

Minimum capital requirements act like a safety netand are set based on the riskiness of a bank's assets. If a bank makes lotsof risky loans or holds risky securities, then it must hold more capital-more of a safety net - than a bank that takes less risks. Thus capitalrequirements act like sort of a charge on risky speculations. This helpsto curtail risky speculation (which can often serve to destabilize markets)and provides institutions with a capital buffer big enough to absorb thehigher expected losses on the asset. In turn this helps reduce the need forpublicly funded bailouts of the banking industry such as what happened withthe S&L Debacle and what seems to happen with IMF bailouts.

Advocates of the so-called Tobin Tax should be ratherfond of well-crafted capital requirements for banks and also other non-bankspeculators. Therefore it would be appropriate for such advocates to havesome input into BCA.

To see how banks view capital requirements and tosee why they like this charge to be as low as possible (especially sincehandy public bailouts are often available anyway) it is useful to look atan example.

Example of the "Cost of Capital" Charge:

- Suppose shareholders have 10 units of equity capitalto invest in a bank.

- Let's suppose the bank's assets will earn 5% andits liabilities will costs 3%.

- If capital requirements are at 10% assets, thenthe bank can create a total of 100 units in assets by lending with 90 inliabilities and 10 in capital. Then shareholders Return on Equity (ROE)is:

(100 * 5% - 90 * 3%) / 10 = 23%

- If capital requirements are at 5% assets, then thebank can create a total of 200 units in assets by lending with 190 in liabilitiesand 10 in capital. Then shareholders Return on Equity (ROE) is:

(200 * 5% - 190 * 3%) / 10 = 43%

Banks refer to the "cost of capital" as the earningsthat are given up by holding capital earning whatever the assets are investedin (usually a low risk bond rate) versus the required shareholder returnrate, which for banks is normally around 20% after tax. In the case of theexample above we might like to calculate the cost of capital of the extra5 units of capital that had to be held as capital in the 10% requirement,but got to be released and invested in banking business (making loans) foranother 100 in loans in the 5% requirement.

The costs of capital of these 5 units is:

Earnings on 5 units in 5% Capital Requirement - Earningson 5 Units in 10% Capital Requirement

= (100 * 5% - 95 *3%) - 5% * 5 = 1.9

This equates to an ROE cost of 1.9/5 = 38% = 43% -5%.

So you can see why banks like lower capital requirementson the same set of assets and why good risk-based capital requirements helpdeter certain risky or speculative activities.

Minimum capital is defined in BCA as:

8% * Risk Weighted Asset Base

The risk weighted asset base brings assets into capitalrequirements commensurate with the risks associated with them. These risksare:

Credit Risk = Default risk.
Market Risk = Risk of loss on market positions in the "Trading Book" (defined later).
(Note that Interest Rate Risk is NOT explicitly addressed here but rather is addressed under Pillar 2).
Operational Risk = other risks such as computer failure, mistiming trades, fraud.

In what follows I will focus primarily on Credit Riskrequirements because this is the primary risk for banks and is the main culpritin financial crises. Explanation of how this risk is being treated underthe new BCA will serve to illustrate the direction things are headed in andwill sound most of the necessary alarm bells.

Credit Risk Assessment

The contribution of bank assets (loans or securities)to the risk weighted asset base for credit risk can be calculated using oneof 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;
0%, 20%, 50%, 100% or 150%
The factor will be selected based on the claim counter-party type (sovereign, bank, corporate) and their rating from an independent body such as Standard and Poors, or the Export Credit Agencies. For claims such as retail mortgages a blanket 50% is used and for unrated entities a blanket 100% is used. Interestingly a risk weighting of 100% for commercial real estate is being proposed because this area has been so much of the cause of recent financial crises.
Though a passing statement is made about higher risk weights for higher risk loans, 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 about the loans underlying the Long Term Capital Management (LTCM) crisis whereby major US banks lent heavily to this high-risk, highly leveraged hedge fund whose losses almost collapsed the global financial system. Given the growth in these hedge funds and similar vehicles, their tendency to get debt capital from banks on favorable terms, and the fact that they are NOT REGULATED because they involve "sophisticated investors" the BCA should address this explicitly. The unnamed high risk activities with discretion for setting capital requirements is an area wide open for abuse.
BCA also sets out the capital relief that will be given for various credit mitigation techniques, such as collateral against loans, guarantees, and credit derivatives. This is based on the amount of the asset covered by such risk mitigation techniques.
The Internal Ratings Based (IRB) Approach

- First bank assets are categorized into one of thesix categories of corporates, banks, sovereigns, retail, project finance,and equity.
  Under the IRB approach banks will use their owninternal measures and techniques for setting the Probability of Defaultassociated with each borrower grade. Either the regulators (under the FoundationApproach) or the banks themselves (under the Advanced Approach) will setthe other variables for assigning a risk weighting - these include Loss GivenDefault, Exposure at Default and treatment of guarantees and credits.
  The risk weights for each asset are derived usinga continuous formula specified by the BCA which assumes a normal defaultdistribution, and is function of both the probability of default, the lossgiven default and the maturity of the loan under the advanced approach. Anotheradjustment is made to the group of assets for concentrated risk exposureto single borrowers. No adjustment appears to be made for single groups ofrelated borrowers, which might be a problem, and has certainly been a problemin recent financial crises.
  Under these approaches capital relief is also givenfor credit risk mitigation such as collateral, guarantees, and credit derivativesbased on the amount of the asset covered.

There are very detailed sets of rules for thecirc*mstances under which banks may be able to set capital requirements underthe Standardized, IRB - Foundation and IRB - Advanced techniques.

Without going into this detail here I think it sufficesto use the terminology that the BCA uses - that sophisticated banks withsophisticated risk management techniques will be the ones that get to settheir own capital requirements, which are then to be reviewed by the BankRegulators under Pillar 2. This means that, generally, the self-settingof capital requirements will be done by the largest international banks whoalso suffer most from the "too-big-to-fail" moral hazardrisk.

These are the same banks that tend to exercise powerover their regulators rather than the other way around. Furthermore thecomplexity of both the methodology for the subjective approaches and thecomplexity of the underlying financial instruments will make it very difficultfor the regulators to adequately monitor capital requirements. For example,instruments like credit derivatives are very new, and will often be usedfor purely speculative, as opposed to risk-mitigation, purposes. Self-settingof capital requirements for such new, complex and speculative investmentsis wide open for abuse. It is very interesting that the insurance industryregulators do not yet allow such capital relief on credit derivatives.

Market Risk, Interest Rate Risk and OperationalRisk

Market Risk is now referred to as "trading book" risk and covers those positions in financial instruments and commodities held with trading intent or to hedge other risks in the trading book. Trading intent includes benefiting from short term price movements and locking in arbitrage profits. Evidence of trading intent must be available.

The BCA specifies asset valuation techniques for trading book risks and specific risk capital charges as a percentage of these asset values and capital relief for various hedging strategies. Without having assessed the impact or implications of these separate requirements I will just note that these types of distinctions between trading book and non-trading book assets can create regulatory arbitrage opportunities from the decision of where to place assets based on where they have the least capital requirement.

Interest Rate Risk arises from duration mismatch between assets and liabilities which is a major profit source for all financial operations. It is interesting to note that capital requirements for this are being dealt with under Pillar 2, to be assessed on a case-by-case basis in the supervisory review, rather than having any minimal capital requirements or basic tests specified under Pillar 1.

It is also interesting to note that the insurance industry, for many years, has had specified minimum capital requirements for mismatch risk based on the nature of liabilities as well as mandated asset adequacy tests whereby interest rate shocks are applied to asset/liability portfolios to test the adequacy of assets. The subjectivity of the banking industry's approach could leave this need for capital open for abuse.

Operational Risk arises from all other major sources of risk - such as systems failure, mistiming of trades, fraud and so forth. It is extremely difficult to assess and, like with other risk measures, a range of options are available from specified % income to highly subjective requirements for the "sophisticated" banks.

Pillar 2: Supervisory Review Process

This section of the BCA describes the role of banksupervisors in making sure that banks are managing their risks appropriately.This involves review of banks' risk monitoring techniques and ensuring thatbanks comply with minimum capital requirements. Obviously this role of thesupervisor will become many times more complicated than it has been for thoseclassified as sophisticated banks. This is because of the level of subjectivityand complexity involved in these banks being able to set their own capitalrequirements.

In my view an adequate supervisory effort in the contextof increasingly complex and subjective capital setting methodologies, inconjunction with the convergence of financial services, the increasingcross-border acquisitions, and the growing complexity of financial instrumentsis becoming almost impossible for the largest financial players. As notedearlier this is also where the "too-big-to-fail" moral hazard and associatedrisk is also greatest.

Interestingly the current BCA draft states, in itssection on Pillar 2 that "Bank management clearly bears primary responsibilityfor ensuring that the bank has adequate capital to support its risks". Thissounds very nice. If only it were true! Then we might have avoided so manynasty financial crises whose costs were ultimately borne by the public andgenerally by those who could least afford it. In this statement I would haveto say that the BCBS is wrong, and that this view they have is leading banksupervisors down a very dangerous path. Because banks sit at the heart ofcredit (money) creation - at the heart of the international monetary systemthat we all depend on - it is the PUBLIC in general, not bank management,who bear ultimate responsibility for whether or not the banks have adequatecapital and risk management techniques. The BCBS, and bank supervisors ingeneral, clearly need to be reminded of this as they seem to have forgottenthat they have any responsibility to the public at all.

Pillar 3: Market Discipline or PublicDisclosure

This includes disclosure of risk exposures andcalculations of risk-based capital, risk mitigation techniques, and comparisonof minimum capital to actual capital. Without seeing an example or explicitlist of reporting requirements it is difficult to know how detailed thiswill be. Nevertheless it sounds like it has potential for the general publicto understand just what kind of risks the banking industry is getting usinto.

What already has become clear is that the major banksare complaining about the amount of detail of disclosure required under thisPillar. However, given the statements above about who ultimately bearsresponsibility for bank risks, the public should prefer very detailed disclosure,and maybe even add some additional requirements - such as details of loansrescued by the IMF.

4.Problemswith the new BCA from Public Interest Perspective

Bank supervision and the setting of risk-based capitalrequirements are very complex issues. Mandating risk-sensitive capitalrequirements for banking book assets is very complex because of the diverserange of complex assets and loan structures banks can invest in (or really,create money for). The mandating of quantitative capital requirements tendsto lump together assets with different risk profiles into the same minimumcapital requirement class. This then leads to problems with banks investingpredominantly in the most risky of this class where the returns are higher,but capital requirements the same, as for a lower risk asset.

This reality played a major role in laying the foundationsfor the Asian financial crisis whereby so many loans made by large creditorswere related to overpriced real-estate that didn't carry a capital chargeover safer loans. There is no question this was also a primary cause of theLatin American Debt crisis, the aftermath of which helped create the firstround of Basel Accords. There is also little doubt that this facilitatedthe Long Term Capital Management Crisis, heavily funded by large USbanks.

It is highly likely that this problem of mandated% capital requirements for broad asset groups and the extensive "regulatoryarbitrage" it generates is a large part of the rational behind the BCArecommendations of Internal Ratings Approaches. Here banks largely set theirown capital requirements based on their internal assessments of risk forthe specific assets they hold. It is then thought that the supervisory roleof regulators and various disclosure requirements will ensure that banks'capital levels and risk management techniques are adequate.

In a world where bank regulators truly representedthe interests of the public, and the public had extensive oversight and inputinto banking system operations and risk management, this would sound likea pretty good idea. It would also require that bank regulators actually havethe resources and ability to properly monitor bank risk exposures and capitallevels, as well as the necessary authority to make banks improve their practiceswhere needed. Unfortunately none of these conditions hold today and thisis discussed in more detail in the following points.

Trends in Bank Supervision

As noted earlier bank supervision has undergone radicalshifts in recent decades in part due to the worldwide convergence of financialservices - banking, brokerage and insurance - operations. This has createdlarge conglomerates involved in all aspects of financial services and resultedin new regulatory structures in the form of "umbrella supervision" of thenew conglomerates. This has complicated financial supervision and also maycreate a shift towards more uniform supervision across financial operations(though we are not there yet, or even close).

The last major industrialized nation to merge financialservices was the United States in 1999. Under such changes the Federal Reservebecame the US Umbrella Supervisor of Financial Services Conglomerates, inaddition to retaining its previous powers as bank holding company andstate-chartered bank supervisor. While the US Government body known as theOffice of the Comptroller of the Currency still retains some powers as supervisorof national banks, today the Federal Reserve is the "king of regulators".It seems that the Federal Reserve will have the ultimate responsibility forthe supervision of all big financial operators based in the United States.It is the Federal Reserve in the United States who will ultimately overseethe standards set by BCA, because BCA applies to the international playersthat will be supervised by the Fed.

This reality is potentially fraught with peril fora number of reasons. First, although the Federal Reserve has some governmentoversight its operations are disproportionately controlled by the privatebanking sector itself, the very same group supervised by the Fed. This dominationby the banking sector comes partly from the role of the Federal AdvisoryCouncil, who are the primary Federal Reserve Board advisors and are 100%bankers. It also comes from the fact that most (67%) of the directors ofthe 12 Federal Reserve Banks are appointed by the banks, and that the FederalReserve Board is generally dominated by Wall Street choices.

Second is the fact that the Federal Reserve is firstand foremost responsible for the monetary policy of the world's linchpincurrency, the US Dollar. The role of supervisor - concerned with safety andsoundness in the banking system - can and does often directly conflict withthe goals of monetary policy. This creates the potential for very harmfulconflicts of interest with worldwide consequences. A classic example of thisarose before the Latin Debt Crisis when the Federal Reserve, from a monetarypolicy point of view, wanted to raise interest rates to squash inflation.At the same time, based on earlier years' desire for credit expansion (amonetary goal), the Federal Reserve (as bank holding company supervisor)had allowed banks to expand loans well beyond what their capital levels couldsupport. So by the end of the 1970's past credit expansion had led banksinto a situation where defaults on Latin loans could not be swallowed bytheir low capital levels, and the Fed's desired increase in interest rateswould surely trigger such defaults. The end result that solved this conflict- hike up US interest rates, trigger the Latin Debt Crisis and have the IMFand World Bank come in as lenders of last resort to bail out the US banks!And who paid for this crisis for which the conflict of interest in supervisorystructure/monetary policy was largely responsible? The people of Latin America,of course!

The recognized dangers of having the umbrella financialregulator be the same entity as that responsible for monetary policy areillustrated by the fact that no other major industrialized nation has putthese two, often conflicting, functions under the same body. The fact thatthis has been done only in the country that is responsible for credit creationin the linchpin currency could have serious global ramifications as the exampleof the Latin debt crisis indicates.

The situation in the United States beforeGramm-Leach-Bliley was that the Federal Reserve as bank holding companysupervisor would basically assign staff either from Washington and/or thelocal regional Fed bank to work permanently on the supervision of the largerbanks. These staff work mostly on site at the big banks, sort of like permanentfixtures there, or actually like staff of the banking group itself. Theseclose relations are likely to get even closer under the "self-regulation"approach proposed by BCA for the larger banks, and don't bode well forindependent supervision of the larger banking entities.

The incredible complexities of monitoring the capitaladequacy of financial conglomerates in a world of increasingly complexinstruments and loan structures under the "self-regulatory" methods of theInternal Ratings Based (IRB) approach (specified by BCA) will likely madeadequate bank supervision a Herculean task! Given that a potentially talentedbank supervisor would makes pots more money working for the banks themselves,the job is close to impossible and therefore wide open to abuse by thosebanks most likely to adopt IRB. That is, the big banks, and the ones forwhich bailouts are most necessary.

These new rules have the potential to increase boththe frequency and severity of IMF bailouts by allowing more risks to be takenand by allowing those most in need of bailout mechanisms the most leewayfor "bending the rules" during their "self-regulation".

Global Financial Consolidation and "Too-Big-to-Fail" Risks

International treaties like GATT, administered bythe WTO, and under which new financial services agreements have been added,are accelerating the pace of cross-border acquisitions by large Westerninstitutions. Another contributor to this activity was the Asian financialcrises, in the aftermath of which various countries and investors were forcedto sell off their bankrupt financial institutions at fire-sale prices tothe Western institutions who benefited from the IMF bailouts.

Domestically, within the borders of the G-10 countries,mergers and acquisitions between financial institutions have also beenaccelerating. This is creating huge "financial empires" that are increasinglytoo-big-to-fail and, as noted earlier, will also be able to set their owninternally determined capital requirements. The incentives for abuse of minimalcapital requirements created by the "too-big-to-fail" moral hazard aretremendous. This may also give the larger players extra competitive advantagesvia lower capital charges and thereby facilitate more acquisitions.

Furthermore these financial empires seem to be acquiringgreater powers over their own supervisors, meaning that supervisors may notbe able to control them anyway, even if they wanted to. Further compoundingthe problem is that these same regulators are allowing mergers and acquisitionsto proceed unheeded. The best example of that recently was the Federal Reserve'sspeedy approval of Citigroup's acquisition of the Mexican banking giant Banamex.The Federal Reserve completely ignored all public opposition to this deal,and gave no justification for its approval or for overlooking public complaints.One can conclude from this that the Federal Reserve, now the financial regulationking, does not consider itself at all subject to the discipline of democraticaccountability.

Addressing Causes of Financial Crises

We saw earlier that some of the requirements in thenew BCA are aimed at addressing some of the causes and excessive risk takingthat ended in various crises such as the Latin American Debt Crisis, theAsian Financial Crises and the US Savings and Loans Debacle.

Yet other areas of concern are notably absent. Thepast few years have seen a rise in what are known as hedge funds which aregenerally high risk, highly leveraged investment funds for the extremelywealthy. They are also completely unregulated on the premise that they involve"sophisticated investors". As we saw in the case of the Long Term CapitalManagement fund, banks have been making significant loans to these hedgefunds without any corresponding capital charge commensurate with the risksinvolved. Fortunately the banking industry was able to bail itself out ofthis crises and the public did not have to bear the costs of the associatedrecklessness. However the new BCA does not appear to address this increasingrisk of exposure to hedge funds explicitly at all. With no extra capitalcharge on hedge fund financing, banks are probably taking excessive risksin this area. This also exacerbates the risks that hedge funds introduceinto the markets by providing them with an easy source of financing.

The new BCA also does little to address the issueof bank speculative activity, outside more traditional loans, and what riskthis introduces into the financial system in general. For example somedisincentive on speculative activity like currency attacks would go a longway towards reducing major risks in the financial system.

Credit Creation for the Poor and Predatory Lending

The fact that under both the old and new BCA thereare no additional capital charges for sub-prime loans seems to have createda situation whereby banks are originating a significant amount of sub-primeloans to prime risks. This tends to happen with mortgages in the lower incomemarkets and, in fact, in 2000 the Chairman of Fannie Mae reported that aboutone third of sub-prime home loans in the US actually could have receiveda prime loan if credit assessment had been done properly.

It seems that the lack of capital charge differentialhas incented a number of banks to offer higher yielding sub-prime loans whichreflect a higher risk in the return but not in the capital charge. This hashad tragic consequences for these borrowers with many people losing theirhomes in recent years. I am pretty sure that the folks who meet in Baseldon't have lower income customers much on their minds, therefore it is veryimportant for NGOs to make this point.

In general the whole area of predatory lending andcredit creation powers over the poor must be addressed in bank supervisionstandards and is currently nowhere to be found in BCA. In the US for example,the banking industry has a long history of discrimination in providing creditto various groups and a poor record of providing credit on reasonable termsin low and middle income neighborhoods.

Part of the tremendous growth in both overseas lendingand sub-prime lending by US banks has surely been driven by the fact thatdomestic non-bank corporations have sought financing from non-bank sourcessuch that only 20% of their financing actually comes from banks. This haslead to banks increasingly accessing the retail and overseas markets forcredit creation. In both of these markets the banks have not behaved well,and have abused their power over financially weaker debtors. Only strongerbank supervision representing the interests of these debtors can help remedysuch problems.

Supervision of US financial holding companies by theFederal Reserve does not bode well for any representation of the interestsof poorer and foreign creditors in bank supervision. The Federal Reservehas a long track record of ignoring the interests of these groups and indeedhas been lax in enforcing standards such as the US Community ReinvestmentAct. A sneak preview of how the Federal Reserve may respond to interestsof these groups in the future was provided by the Fed's speedy approval ofCitigroup's recent acquisition of the Mexican banking group Banamex. In thisapproval the Federal Reserve completely ignored all complaints from NGOsrepresenting low income groups who have been harmed by Citigroup's widespreadpredatory lending abuses. The total non-response by the Fed to all complaintsabout the merger has lead many observers to wonder whether Citigroup actuallysupervises the Federal Reserve now.

Non-Bank Financial Institutions

BCA does not cover non-bank financial institutions.However we are seeing various countries' umbrella supervisors feeling thepressure to streamline regulation in the wake of financial servicesconvergence.

One the surface it might not make too much sense fora non-bank lender to have different capital requirements than a lender witha banking license. However it does make more sense if one considers thatbanks are backed up by various bailout mechanisms including the IMF and FDIC,due to their special status of being creators of money for the (M3) moneysupply. Because of this central role in money creation it is more importantfor confidence to be maintained in banks than in non-bank institutions. Thisis what maintains the overall confidence in the international monetary system.Therefore the likelihood of bailout is much higher for banks, particularlythe large ones, and bank capital requirements are of much greater interestto the public than those of non-bank financial institutions.

That said, there could also be a very important rolefor risk-based capital requirements on non-bank financial institutions tocurtail the type of speculative activity often responsible for causing crisesin the first place. People opposing the Bretton Woods institutions and advocatesof the Tobin Tax might want to keep this in mind as risk-based capital standardsdevelop across other financial players.

5.Needfor Public Input

The previous sections have been prepared to presenta case for public input into the Basel Capital Accord for the majority ofthe public who are not aligned with the interests of big financial players,but are certainly affected by such international banking agreements. Supervisionof banks and their risk management practices are important public issuesfor reasons outlined above.

However the unfortunate reality is that, of the 200+public comments received by the BCBS, only 1 or 2 are public concerns fromoutside the finance sector. These comments can be viewed at the BIS web siteat www.bis.org. The majority of commentscoming from the larger banks (e.g. comments from Citigroup and the AmericanBankers Association) are generally asking for more leeway in setting theirown capital requirements, and basically requesting lower capital standards.Furthermore there have been many complaints from the big banks about theproposed disclosure requirements.

Originally the last comment period was supposed tobe the one ended May 31^st, 2001 but due to the number of commentsabout the current draft the BCBS has stated on its web site that it willissue another draft for comments in early 2002. Hopefully this will provideopportunity for various NGOs to compile and submit a list of concerns. Thisdocument is intended as a discussion document to begin the process of collectingcomments and concerns from various NGOs working on monetary systemissues.

from http://www.wizardsofmoney.org

http://www.reformed-theology.org/html/books/wall_street/chapter_01.htm

WALL STREET AND THE RISE OF HITLER

By Antony C. Sutton

Preface
Introduction
Unexplored Facets of Naziism

PART ONE: Wall Street Builds Nazi Industry

Chapter One Wall Street Paves the Way for Hitler

1924: The Dawes Plan
1928: The Young Plan
B.I.S. The Apex of Control
Building the German Cartels

B.I.S. The Apex of Control

This interplay of ideas and cooperation between Hjalmar Sehacht in Germanyand, through Owen Young, the J.P. Morgan interests in New York, was onlyone facet of a vast and ambitious system of cooperation and internationalalliance for world control. As described by Carroll Quigley, this systemwas "... nothing less than to create a world system of financial control,in private hands, able to dominate the political system of each country andthe economy of the world as a whole.12

This feudal system worked in the 1920s, as it works today, through the mediumof the private central bankers in each country who control the national moneysupply of individual economies. In the 1920s and 1930s, the New York FederalReserve System, the Bank of England, the Reichs-bank in Germany, and theBanque de France also more or less influenced the political apparatus oftheir respective countries indirectly through control of the money supplyand creation of the monetary environment. More direct influence was realizedby supplying political funds to, or withdrawing support from, politiciansand political parties. In the United States, for example, President HerbertHoover blamed his 1932 defeat on withdrawal of support by Wall Street andthe switch of Wall Street finance and influence to Franklin D. Roosevelt.

Politicians amenable to the objectives of financial capitalism, and academiesprolific with ideas for world control useful to the international bankers,are kept in line with a system of rewards and penalties. In the early 1930sthe guiding vehicle for this international system of financial and politicalcontrol, called by Quigley the "apex of the system," was the Bank forInternational Settlements in Basle, Switzerland. The B.I.S. apex continuedits work during World War II as the medium through which the bankers who apparently were not at war with each other continued a mutuallybeneficial exchange of ideas, information, and planning for the post-warworld. As one writer has observed, war made no difference to the internationalbankers:

The fact that the Bank possessed a truly international staff did, of course,present a highly anomalous situation in time of war. An American Presidentwas transacting the daily business of the Bank through a French General Manager,who had a German Assistant General Manager, while the Secretary-General wasan Italian subject. Other nationals occupied other posts. These men were,of course, in daily personal contact with each other. Except for Mr. McKittrick[see infra] theft were of course situated permanently in Switzerland duringthis period and were not supposed to be subject to orders of their governmentat any time. However, the directors of the Bank remained, of course, in theirrespective countries and had no direct contact with the personnel of theBank. It is alleged, however, that H. Schacht, president of the Reichsbank,kept a personal representative in Basle during most of this time.13

It was such secret meetings, "... meetings more secret than any ever heldby Royal Ark Masons or by any Rosicrucian Order..."14 between the centralbankers at the "apex" of control that so intrigued contemporary journalists,although they only rarely and briefly penetrated behind the mask of secrecy.

http://www.reformed-theology.org/html/books/wall_street/chapter_01.htm

back to the index

B.I.S. - ex-Nazi bank now the world central bank Settlements, Basel, Switzerland (2024)

Other Western Élites

Address: The Tower of Basel - Centralbahnplatz 2, 4051, Basel, Switzerland http://www.bis.org/about/baselmap.htm

This page is the fruit of research for the UK Green Party's economics group for their 2001 mini-conference in Manchester.

BIS Official Website http://www.bis.org/ The Bretton Woods Project http://www.brettonwoodsproject.org/ WALL STREET AND THE RISE OF HITLER. By Antony C. Sutton http://reformed-theology.org/html/books/wall_street/index.html

05Aug03 - Rich Jannsen - Bank watching in Basel

The BIS - Ruling the World of Money - Edward Jay Epstein

Carrol Quigley quote - thebankers' 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

Antony Sutton - B.I.S.  The Apex of Control

All pictures on this page are by Richard Janssen

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: http://www.monetary-reform.on.ca/main.shtml email: editor@monetary-reform.on.ca

UPDATE (9 years later) -

Carrol Quigley, Tragedy and Hope, 1966 - [Bill Clinton's mentor and Georgetown University professor]

Alfred Mendez <alfred.mendes@virgin.net>-

http://www.spectrezine.org

Alfred Mendez' Bankers' Network chart proved impossible to transfer to a web page so it is available here as a Microsoft Word 6 file - a Rich Text file - and an Adobe Acrobat file - so you can print it out.

BIBLIOGRAPHY

Alfred Mendez <alfred.mendes@virgin.net>

http://www.spectrezine.org

Global Financial Centre - B.I.S.

The World Central Bankers' Bank

Board of Directors

Alternates

Senior Officials

Representative Office for Asia and the Pacific

Others

From: 'Trading With The Enemy, How the Allied multinationals supplied Nazi Germany throughout World War Two' - By Charles Higham - pub. Robert Hale, London - 1983 - ISBN 0 7090 10230

[there are some minor typographical errors in this transcription]

Chapter 1 - A Bank for All Reasons From: 'Trading With The Enemy, How the Allied multinationals supplied Nazi Germany throughout World War Two' - By Charles Higham - pub. Robert Hale, London - 1983 - ISBN 0 7090 10230

from http://www.wizardsofmoney.org

from http://www.wizardsofmoney.org

WALL STREET AND THE RISE OF HITLER

By Antony C. Sutton

TABLE OF CONTENTS

PART ONE: Wall Street Builds Nazi Industry

Chapter One Wall Street Paves the Way for Hitler

B.I.S.  The Apex of Control

Address: The Tower of Basel - Centralbahnplatz 2, 4051, Basel, Switzerland
http://www.bis.org/about/baselmap.htm

BIS Official Website http://www.bis.org/
The Bretton Woods Project http://www.brettonwoodsproject.org/
WALL STREET AND THE RISE OF HITLER. By Antony C. Sutton http://reformed-theology.org/html/books/wall_street/index.html

Antony Sutton - B.I.S. The Apex of Control

Convenient formats for printing this article
Ruling the World of Money in Rich Text Format
Ruling the World of Money as a Word Document

reprinted from Monetary Reform Magazine - Canada
website: http://www.monetary-reform.on.ca/main.shtml
email: editor@monetary-reform.on.ca

Chapter 1 - A Bank for All Reasons
From: 'Trading With The Enemy, How the Allied multinationals supplied Nazi Germany throughout World War Two' - By Charles Higham - pub. Robert Hale, London - 1983 - ISBN 0 7090 10230

B.I.S. The Apex of Control