United Nations Monetary and Financial Conference - The Bank For International Settlements Controversy

The Bank For International Settlements Controversy

In the last stages of the Second World War, in 1944 at the Bretton Woods Conference, the Bank for International Settlements became the crux of a fight that broke out when the Norwegian delegation put forth evidence that the BIS was guilty of war crimes and put forth a motion to dissolve the bank; the Americans, specifically President Franklin Delano Roosevelt and Henry Morgenthau, supported this motion. This resulted in a fight between, on one side, several European nations, the American and the Norwegian delegation, led by Henry Morgenthau and Harry Dexter White; and on the other side, the British delegation, headed by John Maynard Keynes and Chase Bank representative Dean Acheson, who tried to veto the dissolution of the bank.

The problem was that the BIS, formed in 1930, had as the main proponents of its establishment the then Governor of the Bank of England, Montagu Norman, and his colleague Hjalmar Schacht, later Adolf Hitler's economics minister. The Bank was as far as known, originally primarily intended to facilitate money transfers arising from settling an obligation from the peace treaty after WWI. After World War I, the need for the bank was suggested in 1929 by the Young Committee, as a means of transfer for German reparations payments ('see: Treaty of Versailles'). The plan was agreed in August of that year at a conference at the Hague, and a charter for the bank was drafted at the International Bankers Conference at Baden Baden in November. The charter was adopted at a second Hague Conference on January 20, 1930. The Original board of directors of the BIS included two appointees of Hitler, Walter Funk and Emil Puhl, as well as Herman Schmitz the director of IG Farben and Baron von Schroeder the owner of the J.H. Stein Bank, the bank that held the deposits of the Gestapo.

As a result of allegations that the BIS had helped the Germans loot assets from occupied countries during World War II, the United Nations Monetary and Financial Conference recommended the "liquidation of the Bank for International Settlements at the earliest possible moment." This dissolution, which was originally proposed by Norway and supported by other European delegates, as well as the United States and Morgenthau and Harry Dexter White, was never accomplished.

In July 1944, Dean Acheson interrupted Keynes in a meeting, fearing that the BIS would be dissolved by President Franklin Delano Roosevelt. Keynes went to Henry Morgenthau to prevent or postpone the dissolution of the BIS, but the next day the dissolution of the BIS was approved. The British delegation did not give up, however, and the dissolution of the bank was still not accomplished when Roosevelt died. In April 1945, the new president Harry S. Truman and the British suspended the dissolution and the decision to liquidate the BIS was officially reversed in 1948.