Founded in 1930 ostensibly to administer German reparation payments for the First World War but its real purpose as detailed in the Statutes: "promote the cooperation of central banks and to provide ... facilities for international finance"... "and to act as a bank for central banks"... was later added. The BIS also facilitates the sale and purchase of gold between central banks and is one of the world's largest holders of gold.
The BIS is not subject to Swiss laws or taxes and authorities may only enter their offices with permission. Some six hundred staff from more than fifty countries do not pay income taxes and their bags are free from searches.
Reparations were a back-and-forth contentious object of negotiations between the subject nations until 1921 when the Reparations Commission reported that Germany would pay 2 billion marks a year until an agreed upon 132 billion gold marks was paid. This agreement would later become less than relevant when the German economy, and finances, proved incapable of performing on these commitments while internally competing interests struggle to survive.
Hyperinflation was the result as Germans wrestled with soaring unemployment, social chaos, food shortages and Marxist militants in the streets where hostages were seized and shot. Taxes were raised and four -hundred thousand public workers were sacked.
1939. The BIS board installed the powerful industrialist and CEO of I G Farben, the fourth largest concern in the world, a German chemical giant. Products included pharmaceuticals, explosives, fuel, paints, pesticides, fertilizer, tires, poison gases... Farben ran its own concentration camp at Auschwitz. Through BIS the Third Reich enjoyed state sponsored theft of Jewish businesses aided by criminal actions of the Reichsbank. Ethical considerations were not a part of BIS values where right or wrong were absent from the bank's rubric. Many of the materials used in the Blitzkrieg came from Farben. Reichsbank is referred to as the financial motor of war, plunder, and genocide.
In Germany a fifth of all housing was destroyed, food production was half its prewar levels, output was one-third that of 1938, many goods were rationed, wages and prices were controlled, and the black market prospered. The Reichsbank was abolished and supplanted with a new central bank, and currency, while Germany's recovery was rooted in the Third Reich's infrastructure and other assets that exceeded values of 1936. Mostly this was because armament and other German companies reinvested massive profits.
Page 159 details the destinies of many Nazi enablers including I G Farben executives, camp doctors connected to prisoner experiments, 104 convicted Nuremberg defendants, and noteworthy especially is a commuted death sentence of one defendant who had personally supervised a mass execution of seven hundred victims.
In 1977 BIS moved into new quarters inside an eighteen story building in Basel and the staff also had access to in-house medical services, a bomb shelter, a canteen for lunch, a restaurant on the top floor, and a country club outside of Basel with swimming and tennis. Ah, "the Tower of Basel" would become an increasing metaphoric reference by many observers and especially by critics of the arcane protector of pecuniary interests.
"The euro was a monstrous creation... It was completely misdesigned," so said economists from business interests but politicians from Germany, France, and Belgium were au contraire in their academic rhetoric which finally prevailed.
In the final chapter author Adam LeBor muses about the BIS as an opaque elitist, and anti-democratic institution that should have been closed in the thirties before it funded the Holocaust and the Nazi war machine and before the birth of the European Central Bank. Instead it has prospered by opacity, secrecy and by a shield of protective and unique legal immunities.
This book's 275 pages are filled with narratives of endemic corruption and greed, self-serving insider trading, the moral indifference of high level executives, the financial facilities for the Nazi's Third Reich through the Reichsbank and the BIS, all aided by the complicity of American financiers and lawyers.
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