I thought I was joking about JP Morgan being among the private shareholders of the BIS, but turns out I was right. I made a copy of the constituent charter and statutes of the BIS, which are in the collection of the Library of Congress.. The initial shareholders were the central banks of Belgium, France, Germany, Great Britain, Italy, and Japan, and what is referred to as "a financial institution of the United States" - a banking group consisting of J.P. Morgan & Co., First National Bank of New York, and First National Bank of Chicago. The central banks and the banking group all agreed to guarantee or arrange for the guarantee of the subscription of the BIS's authorized capital consisting of 500,000,000 Swiss francs equal to 145,161,290.32 gr. fine gold, divided into 200,000 shares. The Convention was signed at the Hague, January 20th, 1930.
Although I have read that the BIS was set up to collect reparation payments from Germany and send them to the countries Germany to whom Germany owed reparations, in fact, the BIS statutes - which appear to serve the same purpose and function as articles of incorporation do when forming a corporation in the US - provided that "The objects of the Bank are:- to promote the co-operation of central banks and to provide additional facilities for international financial operations; and to act as trustee or agent in regard to international financial settlements entrusted to it under agreements with the parties concerned." (Art. 3) Which is about as general a charter as can be imagined.
Art. 4 provides, in part, that "During the said period the Bank, as trustee or agent for the Governments concerned, shall receive, administer and distribute the annuities paid by Germany under the Plan; shall receive, administer and distribute the annuities paid by Germany under the Plan; shall supervise and assist in the commercialization and mobilization of certain portions of the aforesaid annuities; and shall perform such services in connection with the German Reparations and the international settlements connected therewith as may be agreed upon by the Bank with the Governments concerned." [Note - the Plan is The Hague Agreement of January, 30 - which was a treaty between the respective governments mentioned above, entered into because Germany wasn't paying reparations and the other governments were not paying back US loans]
I also copied some stuff about the German Reparation Bonds which were floated afterwards, and later defaulted on, but haven't fully digested it yet. $300,000,000 worth of bonds were supposed to be issued in mid-1930, and Morgan was supposed to offer $85,000,000 worth of those to US investors.
I'm looking into the total amount of money loaned by US interests to German interests after WWI before WWII, haven't teased that out yet but in 1930, by one estimate (testimony before the US House Committee on Banking and Currency, June 26, 1930), European countries in aggregate owed the US $30 billion, which I don't believe was ever repaid. The effect on the US economy of global defaults in the 1920s and 1930s by foreign debtors who owed money to US interests is a story which doesn't appear to have been given much attention, and I think it deserves to be studied. In 1929, US GDP was $104 trillion.
We may be better off being a debtor nation than a creditor nation. We aren't likely to default, and even if we did, so what? It wouldn't be us who suffered, for a change.-g- |
