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To: Alex who wrote (9356)	4/5/1998 6:53:00 PM
From: Abner Hosmer	Respond to of 116763

Thanks very much for that link, Alex. Got booted off before I could finish my posts yesterday and had to come in here to work to reboot the server. I was just coming up to the formation of the BIS and the collapse of Credit-Anstalt. I've saved it to disk so I'll post it here and finish up when I get home. I've paraphrased all of this from the Encyclopedia of World History, which is copyrighted 1940 and 1948 by Houghton Mifflen. It still doesn't explain where France and Germany got their gold, but it does explain the some of the enormous monetary problems facing Europe and the world between the wars, and there are a number of parallels to todays events. regards - Tom 1927 saw the end of the Inter-Allied Commission of Military Control and the problems of German disarmament were transferred to the jurisdiction of the League of Nations. In January of 1929, the Young committee was appointed under the League to re-examine and make a final disposition of the reparations problem. The committee made its report in April and Germany made some counter proposals. The plan was ratified in June. Germany was to undertake the responsibility of transferring payments from German marks into foreign currency under the auspices of a new institution, the Bank for International Settlements. All of the principle central banks were to be represented on the directorate of the bank. Germany was to pay annuities gradually increasing for the first 36 years and ending in 1988. The total annuity of 1.7 billion reichsmarks was less than Germany had been paying under the Dawes plan. In order to avoid any crises in transfer payments, only 660 million reichsmarks were unconditionally payable on an annual basis, the rest of the amount might be postponed for a period of 2 years. The annuity was secured by a mortgage on German state railways. In May of 1931, a crises was touched off by the failure of the Austrian Credit-Anstalt. The failure was largely caused by artificial and impractical restrictions on commerce and finance imposed by the succession states of the old monarchy. The failure precipitated an alarming financial and diplomatic crises in central Europe which threatened to engulf the entire continent. A guarantee of Credit-Anstalt's foreign debts by the Austrian govt was arranged with the help of a foreign exchange credit from 10 of the largest central banks, which was arranged through the BIS. The Bank of France, motivated by the desire to force the abandonment of a customs union between Austria and Germany, refused to lend support. The guarantee failed to check the panic. Foreign funds were rapidly withdrawn from Germany. Banks, governments, and corporations from Austria to Australia were exposed to immediate bankruptcy. Their was widespread fear of fascist or communist uprisings. Britain, despite her own difficulties at home, advanced 150 million schillings to the Austrian National Bank. President Hoover, persuaded that one factor in the crises was the problem of transferring reparations payments and war debts from one currency to another, proposed a moratorium of 1 year on intergovernmental debts. French political opposition caused a disastrous delay. Early in July, Hoover announced the acceptance of the moratorium by all important creditor governments. The European govts regarded the moratorium as a tacit admission that reparations and inter-allied debts were interrelated, which Hooover denied, but the Europeans took the agreement as an admission that inter-allied debts and reparations payments would stand or fall together.