Yesterday, I wrote to you about a huge catalyst coming to the gold markets…
The international banking regulations known as the Basel Accords.
I told you about the effect the most recent one – Basel III – is set to have on global central bank gold-purchasing policies.
Today, I want to take you back to the beginning…
To the year the Bank for International Settlements (BIS) was born.
That’s the entity behind the Basel Accords. It was set up in 1930 in Basel, Switzerland.
Germany was defaulting on its World War I reparations payments. At first, the BIS dealt with German reparations matters.
But it soon became one of the most important financial institutions in the world. And yet, most people still don’t know it exists.
It’s rarely mentioned by the mainstream media. But it plays a key role in how the world of finance works.
And as I showed you yesterday, it has a huge influence over global central banks’ gold-buying policies.
To add to the intrigue, it was initially financed by none other than J.P. Morgan & Company and the New York Fed.
I wrote about the foundation of the BIS in my 2014 book, All the Presidents’ Bankers: The Hidden Alliances That Drive American Power.
So today, I’m sharing an extract of that book with you.
It’s all about how the Bank for International Settlements came to be… the key people behind it… and the secret motivations behind their involvement.
It also shows the influence bankers have held over American presidents – and international politics – for decades.
You’ll also see several parallels with how central bankers and the U.S. government reacted to the 2008 financial crisis.
Cast of Characters
Here are some names you’ll want to keep in mind as you read the extract…
President Calvin Coolidge: Served as U.S. President from 1923 to 1929.
Charles Dawes: Served as budget director under President Warren Harding. Instrumental in facilitating the $500 million Anglo-French loan that the Morgan Bank managed during World War I. Appointed in 1923 by President Coolidge to propose a plan to set an achievable level of German reparations and figure out how to balance the German budget and stabilize its economy.
John Foster Dulles: Grandson of former secretary of state John W. Dulles, and nephew of President Woodrow Wilson’s secretary of state, Robert Lansing. Served briefly as Republican U.S. Senator for New York in 1949. Later served as Secretary of State under President Dwight D. Eisenhower from 1953 to 1959.
President Herbert Hoover: Served as U.S. President from 1929 to 1933.
Thomas Lamont: Partner, then acting head of J. P. Morgan Bank, 1911-1943. Chairman of J. P. Morgan & Company, 1943-1948. Worked closely with President Wilson on the Treaty of Versailles and promoted the League of Nations. Also allied with President Hoover and President Roosevelt.
Gates McGarrah: First chairman of New York Fed, 1925-1930. Executive Committee chairman of Chase, 1926-1930. First head of the Bank for International Settlements, 1930-1933.
Charles Mitchell: Chairman of National City Bank, 1929-1933. Allied with President Coolidge.
Jack “J. P.” Morgan (J. P. Morgan Jr.): Head of the Morgan Bank, 1913-1943. Allied with President Wilson for war financing efforts in World War I. Supported President Roosevelt.
Albert “Al” Wiggin: Chairman of Chase, 1917-1933. Helped establish the Bank for International Settlements in 1930.
Owen Young: American banker. Chair of the 1929 committee to re-examine German reparations. The committee presented its findings in June 1929. Young’s plan established a final reparation figure. And it agreed a payment schedule that would see reparations completed by 1988. This was the first time a final date had been set. The “Young Plan” was ratified by the German government on March 12, 1930.
Roy Young: Chairman of the Federal Reserve, 1927-1930. Appointed by President Coolidge.
And here’s some context for some of the terms mentioned in the extract…
Treaty of Versailles: The most important of the peace treaties of World War I. Ended the state of war between Germany and the Allied Powers. Signed on June 28, 1919, in the Palace of Versailles.
German reparations problem: Demanding compensation from the defeated party was a common feature of peace treaties. Reparations were intended for reconstruction and compensating families who had been bereaved by World War I. But Germany continued to default on her obligations.
Isolationist wave: Isolationists believe that countries should only be concerned with their own issues. They did not support becoming involved with other countries in matters such as war.
Pecora Hearings: In 1932, the Senate Banking Committee began an investigation of the nation’s financial sector. The hearings were named after Ferdinand Pecora, the Banking Committee’s lead counsel. The hearings ultimately exposed how financial institutions knowingly misled investors about certain securities, engaged in irresponsible investment behavior, and offered privileges to insiders not afforded to ordinary investors.
To read the excerpt, follow this link.
Editor, Inside Wall Street with Nomi Prins
P.S. Last week, I released a special briefing about today’s hidden alliances impacting your wealth. Thanks to these alliances, we’re on the brink of the greatest wealth transfer in history… and you can profit if you know what’s coming. Click here to learn more, so you don’t miss out.
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