the Bank for International Settlements (BIS), self-described as the "central bank for central bankers", that controls the vast global banking system with the precision of a Swiss watch.
 by Patrick M. WoodFriday, October 14, 2005 Volume 5, Issue 11 from AugustReview Website recovered through WayBackMachine Website . Preface globalism is upon us like an 8.6 magnitude earthquake.When David Rockefeller and Zbigniew Brzezinski founded the Trilateral Commission in 1973, the intent was to create a "New International Economic Order" (NIEO). To this end, they brought together 300 elite corporate, political and academic leaders from North America, Japan and Europe. Few people believed us when we wrote about their nefarious plans back then. Now, we look back and clearly see that they did what they said they were going to do... The question is, "How did they do it?" Keep in mind, they had no public mandate from any country in the world. They didn’t have the raw political muscle, especially in democratic countries where voting is allowed. They didn’t have global dictatorial powers. Indeed, how did they do it? The answer is the Bank for International Settlements (BIS), self-described as the "central bank for central bankers", that controls the vast global banking system with the precision of a Swiss watch. This report offers a concise summation of BIS history, structure and current activities. Introduction The famous currency expert Dr. Franz Pick once stated, "The destiny of the currency is, and always will be, the destiny of a nation." With the advent of rampant globalization, this concept can certainly be given a global context as well: "The destiny of currencies are, and always will be, the destiny of the world." Even though the BIS is the oldest international banking operation in the world, it is a low profile organization, shunning all publicity and notoriety. As a result, there is very little critical analysis written about this important financial organization. Further, much of what has been written about it is tainted by its own self-effacing literature. The BIS can be compared to a stealth bomber. It flies high and fast, is undetected, has a small crew and carries a huge payload. By contrast, however, the bomber answers to a chain of command and must be refueled by outside sources. The BIS, as we shall see, is not accountable to any public authority and operates with complete autonomy and self-sufficiency. Leading up to Founding As we will see, the BIS was founded in 1930 during a very troubled time in history. Some knowledge of that history is critical to understanding why the BIS was created, and for whose benefit. There are three figures that play prominently in the founding of the BIS: Charles G. Dawes, Owen D. Young and Hjalmar Schacht of Germany. Charles G. Dawes was director of the U.S. Bureau of the Budget in 1921, and served on the Allied Reparations Commission starting in 1923. His latter work on "stabilizing Germany’s economy" earned him the Nobel Peace Prize in 1925. After being elected Vice President under President Calvin Coolidge from 1925-1929, and appointed Ambassador to England in 1931, he resumed his personal banking career in 1932 as chairman of the board of the City National Bank and Trust in Chicago, where he remained until his death in 1951. Owen D Young was an American industrialist. He founded RCA (Radio Corporation of America) in1919 and was its chairman until 1933. He also served as the chairman of General Electric from 1922 until 1939. In 1932, Young sought the democratic presidential nomination, but lost to Franklin Delano Roosevelt. More on Hjalmar Schacht later. In the aftermath of World War I and the impending collapse of the German economy and political structure, a plan was needed to rescue and restore Germany, which would also insulate other economies in Europe from being affected adversely. The Versailles Treaty of 1919 (which officially ended WWI) had imposed a very heavy reparations burden on Germany, which required a repayment schedule of 132 billion gold marks per year. Most historians agree that the economic upheaval caused in Germany by the Versailles Treaty eventually led to Adolph Hitler’s rise to power. In 1924 the Allies appointed a committee of international bankers, led by Charles G. Dawes (and accompanied by J.P. Morgan agent, Owen Young), to develop a plan to get reparations payments back on track. Historian Carroll Quigley noted that the Dawes Plan was "largely a J.P. Morgan production"1 The plan called for $800 million in foreign loans to be arranged for Germany in order to rebuild its economy. In 1924, Dawes was chairman of the Allied Committee of Experts, hence, the "Dawes Plan." He was replaced as chairman by Owen Young in 1929, with direct support by J.P. Morgan. The "Young Plan" of 1928 put more teeth into the Dawes Plan, which many viewed as a strategy to subvert virtually all German assets to back a huge mortgage held by the United States bankers. Neither Dawes nor Young represented anything more than banking interests. After all, WWI was fought by governments using borrowed money made possible by the international banking community. The banks had a vested interest in having those loans repaid! In 1924, the president of Reichsbank (Germany’s central bank at that time) was Hjalmar Schacht. He had already had a prominent role in creating the Dawes Plan, along with German industrialist Fritz Thyssen and other prominent German bankers and industrialists. The Young Plan was so odious to the Germans that many credit it as a precondition to Hitler’s rise to power. Fritz Thyssen, a leading Nazi Industrialist, stated
Some historians too quickly credit Owen Young as the idea-man for the Bank for International Settlements. It was actually Hjalmar Schacht who first proposed the idea3, which was then carried forward by the same group of international bankers who brought us the Dawes and Young Plans. It is not necessary to jump to conclusions as to the intent of these elite bankers, so we will instead defer to the insight of renowned Georgetown historian, Carroll Quigley:
So here we have a brief sketch of what led up to the founding of the BIS. Now we can examine the nuts and bolts of how the BIS was actually put together. The Hague Agreement of 1930 The formation of the BIS was agreed upon by its constituent central banks in the so-called Hague Agreement on January 20, 1930, and was in operation shortly thereafter. According to the Agreement,
As we will see, German reparation payments (or lack thereof) had little to do with the founding of the BIS, although this is the weak explanation given since its founding. Of course, Germany would make a single payment to the BIS, which in turn would deposit the funds into the respective central bank accounts of the nations to whom payments were due. (It would be the subject of another paper to show the shallowness of this operation: Money and gold were shuffled around, but the net amount that Germany actually paid was very small.) The original founding documents of the BIS have little to say about Germany, however, and we can look directly to the BIS itself to see its original purpose:
Virtually every in-print reference to the BIS, including their own documents, consistently refer to it as "the central banker’s central bank." So, the BIS was established by an international charter and was headquartered in Basle, Switzerland. BIS Ownership According to James C. Baker, pro-BIS author of The Bank for International Settlements: Evolution and Evaluation,
Each nation’s central bank subscribed to 16,000 shares. The U.S. central bank, the Federal Reserve, did not join the BIS, but the three U.S. banks that participated got 16,000 shares each. Thus, U.S. representation at the BIS was three times that of any other nation. Who were these private banks? Not surprisingly, they were,
On January 8, 2001, an Extraordinary General Meeting of the BIS approved a proposal that restricted ownership of BIS shares to central banks. Some 13.7% of all shares were in private hands at that time, and the repurchase was accomplished with a cash outlay of $724,956,050. The price of $10,000 per share was over twice the book value of $4,850. It is not certain what the repurchase accomplished. The BIS claimed that it was to correct a conflict of interest between private shareholders and BIS goals, but it offered no specifics. It was not a voting issue, however, because private owners were not allowed to vote their shares.8 Sovereignty and Secrecy It is not surprising that the BIS, its offices, employees, directors and members share an incredible immunity from virtually all regulation, scrutiny and accountability. In 1931, central bankers and their constituents were fed up with government meddling in world financial affairs. Politicians were viewed mostly with contempt, unless it was one of their own who was the politician. Thus, the BIS offered them a once-and-for-all opportunity to set up the "apex" the way they really wanted it -- private. They demanded these conditions and got what they demanded. A quick summary of their immunity, explained further below, includes
Further, members of the BIS board of directors (for instance, Alan Greenspan) are individually granted special benefits:
Lastly, all remaining officials and employees of the BIS have the following immunities:
Of course, a corporate charter can say anything it wants to say and still be subject to outside authorities. Nevertheless, these were the immunities practiced and enjoyed from 1930 onward. On February 10, 1987, a more formal acknowledgement called the "Headquarters Agreement" was executed between the BIS and the Swiss Federal Council and basically clarified and reiterated what we already knew:
As you can see, the BIS, its directors and employees (past and present) can do virtually anything and everything they want, with complete secrecy, immunity and with no one looking over their shoulders. It was truly a banker’s dream come true, and it paved the international freeway for the rampant financial globalism that we see manifest today. Day-to-Day Operations Acting as a central bank, the BIS has sweeping powers to do anything for its own account or for the account of its member central banks. It is like a two-way power-of-attorney – any party can act as agent for any other party. Article 21 of the original BIS statutes define day-to-day operations:
The BIS also may
Why is "agency" an important issue? Because any member of the network can obscure transactions from onlookers. For instance, if Brown Brothers, Harriman wanted to transfer money to a company in Nazi Germany during WWII (which was not "politically correct" at that time), they would first transfer the funds to the BIS thus putting the transaction under the cloak of secrecy and immunity that is enjoyed by the BIS but not by Brown Brothers, Harriman. (Such laundering of Wall Street money was painstakingly noted in Wall Street and the Rise of Hitler, by Antony C. Sutton.) There are a few things that the BIS cannot do. For instance, it does not accept deposits from, or provide financial services to, private individuals or corporate entities. It is also not permitted to make advances to governments or open current accounts in their name.15These restrictions are easily understood when one considers that each central bank has an exclusive franchise to loan money to their respective government. For instance, the U.S. Federal Reserve does not loan money to the government of Canada. In like manner, central banks do not loan money directly to the private or corporate clients of their member banks. How Decisions are Made The board of directors consist of the heads of certain member central banks. Currently, these are:
Of these, five members ( Canada, Japan, the Netherlands, Sweden and Switzerland) are currently elected by the shareholders. The majority of directors are "ex officio," meaning they are permanent and are automatically a part of any sub-committee. The combined board meets at least six times per year, in secret, and is briefed by BIS management on financial operations of the bank. Global monetary policy is discussed and set at these meetings. It was reported in 1983 that there is an inner club of the half dozen central bankers who are more or less in the same monetary boat: Germany, U.S., Switzerland, Italy, Japan and England.17 The existence of an inner club is neither surprising nor substantive: the whole BIS operation is 100% secret anyway. It is not likely that members of the inner club have significantly different beliefs or agendas apart from the BIS as a whole. How the BIS works with the IMF and the World Bank The interoperation between the three entities is understandably confusing to most people, so a little clarification will help. The International Monetary Fund (IMF) interacts with governments whereas the BIS interacts only with other central banks. The IMF loans money to national governments, and often these countries are in some kind of fiscal or monetary crisis. Furthermore, the IMF raises money by receiving "quota" contributions from its 184 member countries. Even though the member countries may borrow money to make their quota contributions, it is, in reality, all tax-payer money.18 The World Bank also lends money and has 184 member countries. Within the World Bank are two separate entities, the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The IBRD focuses on middle income and credit-worthy poor countries, while the IDA focuses on the poorest of nations. In funding itself, the World Bank borrows money by direct lending from banks and by floating bond issues, and then loans this money through IBRD and IDA to troubled countries.19 The BIS, as central bank to the other central banks, facilitates the movement of money. They are well-known for issuing "bridge loans" to central banks in countries where IMF or World Bank money is pledged but has not yet been delivered. These bridge loans are then repaid by the respective governments when they receive the funds that had been promised by the IMF or World Bank.20 The IMF is the BIS’ "ace in the hole" when monetary crisis hits. The 1998 Brazil currency crisis was caused by that country’s inability to pay inordinate accumulated interest on loans made over a protracted period of time. These loans were extended by banks like Citigroup, J.P. Morgan Chase and FleetBoston, and they stood to lose a huge amount of money. The IMF, along with the World Bank and the U.S., bailed out Brazil with a $41.5 billion package that saved Brazil, its currency and, not incidentally, certain private banks. Congressman Bernard Sanders (I-VT), ranking member of the International Monetary Policy and Trade Subcommittee, blew the whistle on this money laundry operation. Sander’s entire congressional press release is worth reading:
One can surmise that a financial circle exists where the World Bank helps nations get into debt, then when these countries can’t pay their massive loans, the IMF bails them out with taxpayer money - and in the middle stands the BIS, collecting fees as the money travels back and forth like the ocean tide, while assuring everyone that all is well. BIS dumps gold-backed Swiss Francs for SDR’s On March 10, 2003, the BIS abandoned the Swiss gold franc as the bank’s unit of account since 1930, and replaced it with the SDR. SDR stands for Special Drawing Rights and is a unit of currency originally created by the IMF. According to Baker,
This "basket" currently consists of the euro, Japanese yen, pound sterling and the U.S. dollar. The BIS abandonment of the 1930 gold Swiss franc removed all restraint from the creation of paper money in the world. In other words, gold backs no national currency, leaving the central banks a wide-open field to create money as they alone see fit. Remember, that almost all the central banks in the world are privately-held entities, with an exclusive franchise to arrange loans for their respective host countries. Regional and Global Currencies: SDR’s, Euros and Ameros There is no doubt that the BIS is moving the world toward regional currencies and ultimately, a global currency. The global currency could well be an evolution of the SDR, and may explain why the BIS recently adopted the SDR as its primary reserve currency. The Brandt Equation, 21st Century Blueprint for the New Global Economy notes, for instance, that,
As to regional currencies, the BIS has already been hugely successful in launching the euro in Europe. Armed with new technical and social know-how, the BIS’ next logical step is to focus on America and Asia. For instance, according to BIS Papers No. 17, Regional currency areas and the use of foreign currencies,
Assuming that NAFTA permanently identifies Canada, the U.S. and Mexico as one trading block, then North America will look like the European Union and the Amero will function like the Euro. All of the work put into the SDR would be perfectly preserved by simply substituting the Amero for the U.S. dollar when they choose to bring the Amero to ascendancy over the dollar. For those American readers who do not grasp the significance of the adoption of the euro by European Union countries, consider how one American globalist describes it. C. Fred Bergsten is a prominent and core Trilateral Commission member and head of the Institute for International Economics. On January 3, 1999, Bergsten wrote in the Washington Post,
Bergsten will have to rephrase this when the U.S. gives up the dollar for the amero - that will become the most dramatic voluntary surrender of sovereignty in recorded history! Conclusions Our credo is "Follow the money, follow the power." This report has endeavored to follow the money. We find that:
NOTE: Carl Teichrib, World Research Library Senior Fellow, contributed to this report. Footnotes
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