Mar 1933 to Apr. 1945, The Roosevelt Years 2nd Edition, part 13
The two main actors were Montagu Norman, the Governor of the Bank of England, and Hjalmar Schacht of the German central bank. It is incredible to think that at a time of total war between England and Germany, of daylight bombing by the US Air Force and night time by the RAF, Montagu Norman could safely take flights across German-occupied Europe to meet his German opposite number in Basel. These regular Bank for International Settlements meetings may even have included a stop-over in Germany for refueling.
Britain and the Bank of England found itself forced by treaty to trade with the enemy; to be complicit in these monetary operations before and during the war. One would have supposed that no Treaty contract can be valid if it promotes war.
The founder shareholding members were the central banks of Belgium, France, Germany, Italy, Japan, Great Britain and including the Federal Reserve Bank of New York. By 1933 nineteen other European central banks had subscribed to the Bank.
Its existence was inspired by Hjalmar H.G. Schacht, Nazi Minister of Economics, president of the Reichsbank, and who had powerful Wall Street connections. He was seconded by the banker Emil Puhl, who continued under Schacht's successor, Dr. Walther Funk.
Sensing Adolf Hitler's lust for war and conquest, Hjalmar Schacht even before Hitler rose to power in the Reichstag, pushed for an institution that would retain channels of communication and collusion between the world's financial leaders even in the event of an international conflict. It was written into the Bank's charter, concurred in by the respective governments, that the BIS should be immune from seizure, closure, or censure, whether or not its owners were at war.
Other directors of the Bank were Vincenzo Azzolini the governor of the Bank of Italy, Yves Breart de Boisanger was the governor of the Bank of France and Alexandre Galopin of the Belgian banking fraternity. Of the twelve directors, supporters of the Third Reich appear not to have had a majority. The majority voting rights was taken over by or at least heavily influenced the directors from countries occupied by the Third Reich. The Bank for International Settlements (BIS) was completely under Hitler's control by the outbreak of World War II.
Apart from the Board of Directors, the Bank for International Settlements had a permanent secretariat which included the American, Thomas H. McKittrick. Of the remaining five officers one was Per Jacobssen (Sweden), another was the Secretary General, Italian banker Raffaele Pilotti, and Assistant General Manager Paul Hechler, allegedly Nazi Party member.
McKittrick spent most of his working life in Europe and served on the German Credits Arbitration Committee from 1931 to 1939. He is thought by some to have had Nazi sympathies and links with the OSS. By training McKittrick was a corporate lawyer who had been a director of Lee, Higginson & Co. a company that had made substantial loans to the Third Reich. Early in 1940, McKittrick traveled to Berlin and held a meeting at the Reichsbank with Kurt von Schroder of the BIS and the Gestapo. They discussed doing business with each other's countries if war between them should come.
When Hitler's forces invaded Prague his troops arrested the directors of the Czech National Bank and held them at gunpoint, demanding that they hand over their gold reserve. The Czech directors nervously announced that they had already shifted the gold to the BIS with instructions that it be forwarded to the Bank of England.
However, Montagu Norman, the governor of the Bank of England, a rabid supporter of Hitler ignored the Czech directors and the sent the gold to Berlin. It would end up being used to buy essential strategic materials for use in Hilter's future war making. Gold was not actually sent, gold deposit accounts were adjusted. Thus, all that had to be done was to deduct $40 million from the Bank of England's holdings in Basle and replace the same amount from the Czech National Bank holdings in London.
By 1939, the BIS had invested millions in Germany, while Kurt von Schroder and Emil Puhl deposited large sums in looted gold in the Bank. The BIS was an instrument of Hitler, but its continuing existence was approved by Great Britain even after that country went to war with Germany.
During the key years of Nazi growth the period 1933 to 1945 the board of directors of the Bank for International Settlements included Walter Funk and Emil Puhl, both prominent Nazi officials. Both were convicted at the Nuremberg trials after World War II. In the 1940s after several years of abstaining from BIS business meetings Japan appointed a director, Yoneji Yamamoto. The BIS Annual Report curiously describes him as representing "Berlin." Professor G Bachmann served as a Director of the BIS from May 1931 until May 1939 and prior to that he was President of the Swiss National Bank.
The Bank for International Settlements (BIS) became strongly detested or something to be avoided according to US Secretary of the Treasury Henry Morgenthau in Franklin D. Roosevelt's administration. Morgenthau sent the H. Merle Cochran to Europe to investigate the BIS while Cochran was serving as the Secretary of the American Embassy in Paris. He represented the State Department's sophisticated neutralism before and during the Second World war, and yet was sympathetic with the BIS and to the Nazis.
In 1938 the Bank for International Settlements played a pivotal role in Germany's acquisition of of the Czechoslovakian state's gold. In March 1938, when the Nazis marched into Vienna, Austria much of the gold of Austria was looted and packed into vaults controlled by the Bank for International Settlements. Cochran, in his memoranda to Morgenthau, failed to tell (lied) about this outrageous act of theft.
The gold flowed into the Reichsbank on orders from BIS director, Emil Puhl. On March 14, 1939, Cochran wrote to Morgenthau "I have known Puhl for several years, and he is a veteran and efficient officer." Cochran also praised BIS director Walther Funk.
H.Merle Cochran joined the State Department 1914 and service in many embassies till 1927. In spite of his treasonous actions, he continued a long career in the US State Department.
1927-1930 Consul; Paris, France
1930-1932 Consul; Basle, Switzerland
1932-1939 Financial Secretary of the Embassy; Paris, France
1939-1941 Technical Assistant to Secretary of Treasury; Washington (Department of State)
1941 Special Mission to China, (Stabilization Fund)
1941-1948 Senior Foreign Service Inspector
1949 U.S. Ambassador to Pakistan
1949-1953 U.S. Ambassador to Indonesia
1953 Retired from U.S. Foreign Service
1953-1962 Deputy Managing Director; International Monetary Fund
1963-1969 Chairman of Consortium for Greece; Organisation for Economic Co-operation and Development (O.E.C.D.)
Henry Morgenthau grew more aggravated by McKittrick and the BIS as the war in Europe continued, but did not insist he be withdrawn. He was forced to rely upon Treasury Secret Service reports rather than upon Cochran for information on the BIS's doings.
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 report on the continuing relationship between the Bank for International Settlements and the British government. It infuriated Morgenthau that Britain remained a member of a Nazi-controlled financial institution: Montagu Norman and Sir Otto Niemeyer of the Bank of England were still firmly on the board. Winant had lunch with Niemeyer. He gave an approving report of the meeting on June 1.
Niemeyer had said that the BIS, "guaranteed immunity from constraint in time of war," was still "legal and intact." He admitted that Britain retained an interest in the Bank through McKittrick 21 months after war had broken out. He said that he was in touch with the Bank through the British Treasury and that British Censorship examined all of the mail by his own wish. Asked about the issue of the Czechoslovakian gold, Niemeyer admitted, "Yes, it had a bad public press. However, that was due to the mishandling of the question in Parliament." He further admitted that the government of Great Britain was still a client of the Bank and had accepted a dividend from it. The dividend, it scarcely needs adding, came largely from Nazi sources. Niemeyer said that he believed the British should continue the association for the duration as well as lend the Bank their tacit approval, "If only for the reason that a useful role in post-war settlements might later have an effect."
Niemeyer went on, "It would be of no use at this time to raise difficult legal questions with respect to the relationship of the various countries overrun by the Germans .... McKittrick should stay in Switzerland because he is ... guardian of the Bank against any danger that might occur ... McKittrick might want to get in touch with the American Minister in Switzerland and explain his problem to him. "
On July 13, 1941, Ivar Rooth, governor of the Bank of Sweden, wrote to his friend Merle Cochran -- who had returned to Washington -- about the latest general meeting of the Bank. He said that it was agreed that McKittrick should soon travel to the United States to explain BIS's position to "your American friends ... [in the] very correct and neutral way." Rooth continued, "I hope that our friends abroad will understand the political necessity of committing the Germans to send a division to Finland by railway through Sweden."
On February 5, 1942, almost two months after Pearl Harbor, the Reichsbank and the German and Italian governments approved the orders that permitted American,Thomas H. McKittrick, to remain in charge of the BIS until the end of the war. The Nazis approved the McKittrick as head the Bank for International Settlements (BIS), on January 25, 1943. Emil Meyer of the Swiss National Bank became chairman.
One document of authorization included the significant statement, "McKittrick's opinions are safely known to us." It appears that McKittrick's pro-capitalist and anti-communist political views made him agreeable to the Nazis.
Among the directors under Thomas H. McKittrick were Hermann Schmitz, head of 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 financier of the Gestapo; Walther Funk of the Reichsbank, and Emil Puhl. These last two figures were Hitler's personal appointees to the board.
McKittrick gratefully arranged a loan of several million Swiss gold francs to the Nazi government of Poland and the collaborative government of Hungary. Most of the board's members traveled freely across frontiers throughout the war for meetings in Paris, Berlin, Rome, or Basle. From Pearl Harbor on, the BIS remained listed in Rand McNally's directory as Correspondent Bank for the Federal Reserve Bank in Washington, DC.
In the spring of 1943, McKittrick, ignoring the normal restrictions of war, undertook a remarkable journey. Despite the fact he was neither Italian nor diplomat and that Italy was at war with the United States, he was issued an Italian diplomatic visa to travel by train and auto to Rome. At the border he was met by Himmler's special police, who gave him safe conduct. McKittrick proceeded to Lisbon, whence he traveled with immunity from U-boats by Swedish ship to the United States. In Manhattan in April he had meetings with Leon Fraser, his old friend and BIS predecessor, and with the heads of the Federal Reserve Bank. Then McKittrick traveled to Berlin on a US passport to provide Emil Puhl of the Reichsbank with secret intelligence on financial problems and high-level attitudes in the United States.
The BIS charged a commission on every transaction and even during the war was recording profits of millions of US dollars. Of the 5 million Swiss gold francs the BIS earned as net profits it distributed over 4 million as dividends to its shareholders, i.e. governments of Japan, Germany, Italy, France and Britain.
When the Mussolini regime fell Pilotti and the German Hechler were fearful that 15,795 kgs of gold held in Rome would fall into the hands of the advancing Allies. Pilotti who was in Italy at the time was asked by McKittrick to negotiate with the Bank of Italy. In the same month (Sept 1943), the armistice was signed with the Allies, the Italians and Germans were escorting 119 tons of gold from Rome to Milan. The BIS, in November 1943, then instructed the Bank of Italy to convert all its holdings into gold and move them to safety at their headquarters in Basel, Switzerland.
The Germans were cleverly misusing the BIS (Bank for International Settlements) to transfer either physically to Berlin or by crediting the Riechsbank account with other nation's gold. Had the Bank for International Settlements refused to transfer gold and refused to invest its gold and reserves in Germany during the 1930s and 1940s the Second World War would have ended as suddenly as it had begun and millions of lives would have been spared.
In papers declassified in Sept 1996 by the British Foreign Office it was known to the intelligence services that the Banco de Portugal maintained three parallel accounts with the Swiss National Bank (SNB).
In 1943, some 20.4 tons of the former Belgian gold reserves found their way to coffers in Portugal courtesy of Berlin.
In 1944, Hearst newspapers reporter Burnet Hershey described the Nazis' escape route via Spain as follows: "Beginning in 1943 until June 1944, he transferred large amounts of gold across France to Spain and then on to Argentina, where his deposits were safe under the sympathetic Peron government."
And in the summer of 1942, the plans for the projected American invasion of Algeria were leaked to the governor of the French National Bank, who immediately contacted his German colleague in BIS, SS Baron Kurt von Schroeder (of the Stein Bank of Cologne). As a result by transferring 9 billion gold francs to Algiers via BIS the Germans and their French subsidiaries made a killing.
Because of the close relationship between American and German corporations, a substantial portion of supplies went to Germany often via fascist Spain by ship and tanker under flags of neutrality. In mid- 1944 America was supplying Germany with 48 thousand tons of oil, and 11 hundred tons of much-needed tungsten per month. The fact that this trade was illegal in the USA did little to stop it for much of this period. Even the Secretary of Treasury, Henry Morgenthau, and his Assistant, Harry Dexter White, aware as they well were of the part played by BIS in this, could do little about it.
By the summer of 1944 even the pro-German directors at the BIS could see that for Germany that the war was all but lost. It was obvious to the Allies that by 1944 that Germany had already run out of its own money. The German - Swiss Trade Agreement was still in force and operating. Somehow the Reichsbank had managed to send gold to Switzerland in the previous year, ie 1943. (Hitler's gold: the story of the Nazi war loot by Arthur Lee Smith, "Swiss Connection", p 62, Ref Omgus AG, 1945- 46, Heath to Robinson Feb 1946).
On March 26, 1943, liberal Congressman Jerry Voorhis of California entered a resolution in the House of Representatives calling for an investigation of the Bank for International Settlements (BIS), including "the reasons why an American retains the position as president of this Bank being used to further the designs and purposes of Axis powers." Randolph Paul, Treasury counsel, sent up the resolution to Henry Morgenthau on April 1, 1943, saying, "I think you will be interested in reading the attached copy of [it]." Morgenthau was interested, but he made the mistake and did nothing. The matter was not even considered by Congress.
Washington State Congressman John M. Coffee objected and introduced a similar resolution in January 1944. He shouted, angrily, "The Nazi government has 85 million Swiss gold francs on deposit in the BIS. The majority of the board is made up of Nazi officials. Yet American money is being deposited in the Bank." Coffee pointed out that the American and British shareholders were receiving dividends from Nazi Germany and Japan and that the Germans and Japanese were receiving dividends from America. The resolution was tabled.
Norwegian economist of part-German origin named Wilhelm Keilhau was infuriated by Washington's continuing refusal to break with the Bank and its acceptance of a flagrant financial alliance with its country's enemies.
Keilhau introduced a resolution at the International Monetary conference at Bretton Woods, New Hampshire, on July 10, 1944. He demanded Bank of International Settlements to be dissolved "at the earliest possible moment." However, pressure was brought to bear on him to withdraw a second resolution, and he was forced to yield. The second resolution called for an investigation into the books and 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 and Edward E. (Ned) Brown of the American delegation and the Chase and First National banks tried to veto Keilhau's resolution. They were supported by the Dutch delegation and by J.W. Beyen of Holland, the former president of BIS, despite the fact that Holland's looted gold had gone to the BIS. Leon Fraser of the First National Bank of New York stood with them. So did the British delegation, strongly supported by Anthony Eden and the Foreign Office. After initial support, the distinguished economist Lord Keynes was swayed into confirming and called for a postponement of the Bank's dissolution until postwar -- when the establishment of an international monetary fund would be completed.
Lord Keynes's wife, the former Lydia Lopokova, was a member of a wealthy czarist (White Russian) family who influenced her husband toward delaying the BIS's dissolution and a tabling of all discussion of looted gold.
Dean Acheson, Assistant Secretary in the Department of State (the American delegation) was firmly opposed to dissolution. The minutes of the meetings between Morgenthau, Edward E. Brown, Acheson, and other members of the delegation on July 18 and 19, 1944, at the Mount Washington Hotel at Bretton Woods show Acheson arguing for retention of the BIS until after the war. He used the spurious argument that if McKittrick resigned and the Bank was declared illegal by the United States government, all of the gold holdings in it owned by American shareholders would go direct to Berlin. Acheson must surely have known that the gold was already deposited for the Axis in the Swiss National Bank.
In May 1944, while young Americans were dying on the Italian beachheads, Thomas H. McKittrick, the American president of the Nazi-controlled Bank for International Settlements preside over a fourth annual meeting in time of war. He sat down with his German, Japanese, Italian, British, and American executive staff to discuss such important matters as gold that had been sent to the Bank by the Nazi government after Pearl Harbor for use by its leaders after the war. The gold that had been looted from the national banks of Austria, Holland, Belgium, and Czechoslovakia, or melted down from the Reichsbank holdings of the teeth fillings, spectacle frames, cigarette cases and lighters, and wedding rings of the murdered Jews.
Senator Charles W. Tobey of New Hampshire emerges with great credit from the minutes of the meetings at the Mount Washington. At the July 18 meeting he said, savagely, to the company in general, "What you're doing by your silence and inaction is aiding and abetting the enemy." Morgenthau agreed.
Germany surrendered on May 7 and 8 1945.
McKittrick said that there was a little group of financiers who had felt from the beginning that Germany would lose the war; that after defeat they might emerge to shape Germany's destiny. And that they would "maintain their contacts and trust with other important banking elements so that they would be in a stronger position in the postwar period to negotiate loans for reconstruction of Germany."
In 1948, under great pressure from Treasury, the Bank for International Settlements was compelled to hand over a mere $4 million in looted gold to the Allies.
Despite the fact that the evidence of the Puhl-McKittrick conspiracy was overwhelming, McKittrick was given an important post by the Rockefellers and Winthrop Aldrich: vice-president of the Chase National Bank, a position he occupied successfully for several years after the war. In 1950 he invited Emil Puhl to the United States as his honored guest. And the Bank for International Settlements, despite the Bretton Woods Resolution, was not dissolved.
(Sources: TRADING WITH THE ENEMY: AN EXPOSE OF THE NAZI-AMERICAN MONEY PLOT 1933-1949, Chapter 1: A Bank for All Reasons, http://www.bilderberg.org/bis.htm
Ruling the World of Money as a Word Document, Harpers Magazine (1983) by Edward Jay Epstein
The BIS then felt free to provide gold and hard currency as demanded of the Reichsbank. One possibility is that confiscated gold would be transferred to the Reichsbank where ledgers were manipulated and this meant the gold would lose it original identity.
Gold was accepted by the BIS that had been transferred from the central banks of Argentina, Denmark, Estonia, Finland, Hungary and Norway. The intermingling of ownership allowed Germany a greater freedom of operation in capital and currency markets. It could claim, for instance, that the hard currency requested was intended for the Bank of Norway wishing to import much needed materials.
What can be said of the Bank for International Settlements (BIS) during the war is that:
The BIS sold gold to the Reichsbank on a numerous occasions.
The BIS know or suspected the gold traded did not legitimately belong to Germany.
The BIS operated in concert with the Swiss National Bank to store and distribute Nazi gold. Tax-payers who were funding the war saw their sacrifice turned into profits in Switzerland.
Bank's dividends were still being divided equally in wartime among the British, German, Japanese, and American banks. It was not until 1944 that they discovered Germany was receiving most of the dividends.
Germany relied on the BIS (and the SNB) throughout the war unlike the Allies.
The BIS traded in blood gold, gold it knew was suspect Raubgold, stolen gold and Totengold, gold taken from dead slave laborers / extermination camps victims.
Overall the BIS sold a total of 5,479 Kilograms of fine gold to the Reichsbank.
New deposits of fine gold totaling 13,542 Kilograms were received by the BIS from the Reichsbank.
Of the 13,542 Kilograms, 9,649 Kilos was transferred to the BIS in various amounts to the national banks of Romania, Yugoslavia, Bulgaria Portugal and the Swiss National Bank.
The remaining 3,894 kilos remained in the possession of the BIS at the end of the war.
Reichsbank was still making gold payments in April 1945 and the Swiss were still taking the money.
BIS should have ceased to operate when WWII began.
Germany had sold $300 million in gold (or from $4.9 to $19.5 billion in 2013 dollars) to Swiss banks and laundered in the region of $140 million in currency (or from $2.3 to $9 billion in 2013 dollars) through neutral countries like Portugal and Spain.
With Germany defeated the BIS had no option but to open its books and account for gold transfers. Approx $550 million (or rom $9 to $36 billion in 2013 dollars) was owed to claimant countries. Of this amount only $312 million (for from $5 to $20 billion in 2013 dollars) was paid over to the Tripartite Gold Commission.
It is estimated at the beginning of the World War Two that Germany had $120 million in its gold reserves (or from $2 to $9 billion in 2013 dollars)
The Third Reich was not rich, but was a debtor nation.
The Germans acquired an additional $661 million in gold bullion during the war (or from $11 to $47 billion in 2013 dollars). Most of the loot came from foreign banks when they invaded and from stealing it from Jews they sent to the gas chambers (blood gold).
The Allies set up the Tripartite Gold Commission (TGC) in September 1946, based in Brussels, to trace all the gold confiscated by the Nazis and return it to its rightful country or private owners. The Triparite Gold Commission was not able to be disbanded until 1998.
For Europe generally, the money was irredeemable and irreplaceable. Once spent, it could not be recaptured goods and services had been provided for the money. Only a fraction would ever be recovered and only a further fraction would be forced out of the hands of those governments, e.g. Spain, Portugal, Sweden, and Switzerland, which the Nazis had been paid in stolen gold. These few recipient countries must have guessed, if not known, by the large quantities entailed, that it could not be Germany's own money.
Hitler and Nazism had bankrupted all of Europe. Even his supplier nations -Sweden, Switzerland, Portugal, Spain, and Turkey etc. suffered economic hardship and currency whose value was worth much less. The practical implications of war invariably means added hardships; livestock neglected or slaughtered; fields not ploughed; no harvests to gathered in. Workforces depleted by death, torture or maiming lead to and factories, farms, fishing fleets and coal mines etc working at reduced capacity. Europe could not feed herself nor warm herself and in many places half of all homes were damaged and uninhabitable.
It took until September 1945 for the Bank for International Settlements (BIS) had notified central banks that they were looking for monetary gold of which Germany had deprived them during the occupation of their respective countries.
The words that best describe Switzerland's intentions and probity can be summed up in a few harsh words unrepentant, unashamed, unapologetic, self-serving and not in a small way contrite.
The Bank for International Settlements and Swiss National Bank were jointly party to the handling if not laundering gold. Only a small fraction was paid over to the Allies by the Swiss. The deceitfulness, deception and downright dishonesty of the Swiss authorities persisted after the surrender of Germany and well beyond the bounds of acceptable human behavior.
Throughout the wartime period and afterwards, the BIS made astronomically large profits by comparisons of the day and the Directors received handsome fees.
When Per Jacobssen visited the Reichsbank in 1943, the official reason given was to discuss the reorganization of the German banking system. Unofficially, it was to discuss with a select band of Reichsbank officials the defeat of Germany which, from 1942 onwards, looked a near certainty to `informed' people. Jacobssen, Reichsbank officials and a few commercial bankers met to examine the Allies plans for a new post-war currency regime, i.e. Bretton Woods.
(source: Central Bank Cooperation at the BIS, 1930 1973, p.230).
For over two and a half years before they lost WWII, the Nazis were going underground. And secondly, Hitler was unimportant in this whole effort.