GR-related: Thomas McKittrick and the BIS

[Kai Frederik Lorentzen]

 > McKittrick started work in Basel in January 1940. The outbreak of war 
in Europe posed existential choices for the BIS management. There were 
three options: liquidate the bank, downsize and become dormant until the 
end of hostilities, or remain as active as possible within the bounds of 
the declared policy of “neutrality.” The directors were unanimous—and 
already thinking ahead of the needs of transnational capital: The BIS 
must be kept going to assist with postwar financial reconstruction. 
McKittrick assured the Swiss authorities that the bank would be neutral 
and the staff would not “undertake political activities of any sort 
whatsoever on behalf of any governments or national organizations.”

The bank was indeed a bizarre island of neutrality. Basel is perched on 
the northern Swiss border, overlooking both France and Germany. Just a 
few miles away, Allied and Nazi troops were fighting and dying. But at 
the BIS, nationals of opposing sides worked together in courteous 
harmony. Roger Auboin, the manager, was a Frenchman. Paul Hechler, the 
assistant manager, was a German, a Nazi party member who signed his 
correspondence ‘/Heil Hitler/,’ as German law required. Rafaele Pilotti, 
the bank’s secretary, was Italian. British nationals also worked at the 
bank. After the fall of France, the BIS and the staff were temporarily 
evacuated from Basel, in anticipation of a Nazi attack. But the German 
invasion of Switzerland never materialized. Switzerland was far more 
useful to the Nazis as a neutral launderer of Nazi gold, a supplier of 
hard currency, and a financial channel to the rest of the world than as 
another territory under Nazi rule.

In any case, McKittrick’s declarations of neutrality soon proved 
worthless. He and the rest of the bank’s management turned the BIS into 
a de facto arm of the Reichsbank. This was not a result of inertia, 
passivity, or bureaucratic sloth. It followed from a series of 
deliberate policy decisions. The BIS accepted Nazi gold looted from 
occupied countries such as Belgium until the final days of the war, when 
even neutral countries refused the plunder. The BIS recognized the 
forcible incorporation of 10 countries, including France, Belgium, 
Greece, and the Netherlands, into the Third Reich. The BIS allowed the 
Nazi occupation regimes to take ownership of those nations’ BIS shares, 
so that the Axis bloc held 64.7 percent of the bank’s voting stock. 
Board meetings were suspended, but Annual General Meetings continued, 
with member banks voting by proxy.

McKittrick was especially close to Emil Puhl, the Reichsbank 
vice-president, whom McKittrick described as his friend. Puhl, who was a 
director of the BIS, was a regular visitor to Basel. In autumn 1941 
McKittrick gave Puhl a tutorial on the Lend-Lease program, under which 
the United States supplied the Allies with arms, ammunition, and other 
war materiel. The act, passed in March of that year, effectively marked 
the end of the United States’ policy of neutrality. But America’s entry 
into the war did not affect McKittrick’s cordial and productive 
relationship with the Reichsbank. Puhl wrote of McKittrick in September 
1942, “Neither his personality nor his manner of conducting business 
have been any cause for any criticism whatsoever.”

The Reichsbank greatly valued its relationship with the BIS. Berlin 
continued to pay interest on the BIS’s prewar investments in Germany, 
even though that interest contributed to the bank’s dividends, which 
were paid to its shareholders, including the Bank of England. Thus, 
through the BIS, Nazi Germany was contributing to Britain’s wartime 
economy. It was a price worth paying, Puhl believed. Some of the BIS’s 
dividend payments to shareholders in Nazi-occupied countries went 
through the Reichsbank, thus giving Berlin access to the foreign 
exchange transactions and allowing it to charge a fee for its services.

Hermann Schmitz, the CEO of IG Farben, the giant Nazi chemicals 
conglomerate, and a BIS board member, sent his sincerest New Year wishes 
to McKittrick in January 1941. Schmitz wrote, “For their friendly wishes 
for Christmas and the New Year, and for their good wishes for my 60th 
birthday, I am sending my sincere thanks. In response, I am sending you 
my heartfelt wishes for a prosperous year for the Bank for International 
Settlements.” It would certainly be another prosperous year for IG 
Farben, one of whose subsidiaries manufactured Zyklon B, the gas used to 
murder millions of Jews.

***

In the winter of 1942 McKittrick traveled to the United States. His 
return to New York was the talk of Wall Street. On Dec. 17, 1942, Leon 
Fraser, an American banker and himself a former BIS president, hosted a 
dinner for McKittrick at the University Club. Thirty-seven of the United 
States’ most powerful financiers, industrialists, and businessmen 
gathered in his honor. They included the presidents of the New York 
Federal Reserve, the National City Bank, the Bankers’ Trust, and General 
Electric, as well as a former under-secretary of the treasury and a 
former U.S. ambassador to Germany. Standard Oil, General Motors, JP 
Morgan, Brown Brothers Harriman, several insurance companies, and Kuhn 
Loeb also sent executives. It was probably the greatest single gathering 
of America’s war profiteers. Many of these companies and banks had, like 
McKittrick, made fortunes from their connections with Germany, 
connections that carried on producing profits long after Hitler took 
power in 1933 and certainly after the outbreak of war in 1939. <

http://www.tabletmag.com/jewish-news-and-politics/143053/hitlers-american-banker



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