462.00R296 Bank for International Settlements/85
The Acting Secretary of State to the Consul at Basel (Hitch)
Sir: The Department has received the Consulate’s despatch No. 329 dated February 4, 1930,35 requesting instructions regarding the [Page 236] attitude of the Consulate toward the Bank for International Settlements.
The establishment at Basel of so important an institution as the Bank for International Settlements will make it a particular duty of the Consul there to study the Bank and its operations; it may make it possible for the Consulate to submit valuable economic and political reports; the Consul will naturally maintain the most cordial possible relations with the Bank, its officers, directors and personnel; however, the Consul is charged with no special mission toward the Bank and should avoid any attitude which might be misconstrued as evidencing such a mission.
The Department has hitherto designated an officer as an Acting American Observer with the Reparation Commission; the Bank succeeds to some of the functions of the Reparation Commission, but not in a way that will admit of the participation of Government representatives in its activities. The United States is not a party to the international agreements pursuant to which the Bank is founded, nor will it have contractual relations with the Bank such as will be established between the Bank and several other governments by the Trust Agreement (Annex VIII to The Hague Agreement of January 193036). The United States has negotiated an agreement with Germany which contemplates direct payment by Germany of its indebtedness to the United States.37 Similar arrangements are in force with the other European debtors of the United States. The Secretary of State on May 16, 1929, issued a statement (copy of which is enclosed)38 that the American Government will not permit any officials of the Federal Reserve System either to themselves serve or to select American representatives as members of the proposed International Bank.
In some respects the position of the Consulate will not be dissimilar from that of the other Consulates at Basel. As stated in the preamble to the Constituent Charter of the Bank, the Bank is founded by Central Banks pursuant to a Plan39 adopted by the Powers signatory to The Hague Agreement of January 1930. The Plan (Young Plan, paragraph 148) “recommended the creation of the Bank for International Settlements in order to provide machinery for the removal of the Reparation obligation from the political to the financial sphere.” The Plan states (paragraph 72) that “the [Page 237] Bank excludes from its procedure all political influences” and again (paragraph 54) “its organization will be outside the field of political influences.” The British Chancellor of the Exchequer stated in the House of Commons February 20, 1930:
“While His Majesty’s Government welcome the creation of the Bank for International Settlements, it is, as I have previously stated, a non-political institution, and national Governments will not be concerned with the direction of the policy of the Board. Neither the action of individual directors, nor the action of a Central Bank under Article 20 of the Statutes requires the prior approval of the Treasury of the country to which the director of the Central Bank belongs.… There will be no Treasury representatives at Basel.”
In view of these antecedents and of the traditions of the Central Banks represented on the Board of Directors of the Bank, the Consul should avoid over-ambitious initiatives in informing himself regarding its operations.
It is not known what reports the Bank will issue regarding its activities.
It is presumed that on mere request, the Bank will furnish the Consulate in a routine way, such information and notices as it makes available generally to other consulates and information agencies in Basel. While such routine information will probably receive wide publicity, the Department, and other Departments in Washington, will wish to build up files of information on the Bank which should include the texts of the more important formal announcements which the Consulate can make available. The Consul will, of course, not refuse such additional economic information as comes to him, with due regard to the proprieties, through personal contacts in view of the known interest of the United States Consular Service in economic reporting.
In spite of the desire of the founders of the Bank to minimize political influences, it is obvious that the operations of the Bank, and particularly the annual election of Directors, will not be devoid of international political interest. The Consul’s opportunities for observation and study may enable him to render reports in this regard which will be of interest both to the Department and to its several missions.
The Consulate should address its despatches and reports regarding the International Bank to the Legation at Berne, which will forward them to the Department and provide for their further distribution through the European Information Center at Paris and assure the Consulate the reciprocal delivery of information from other European missions.
I am [etc.]
- Not printed.↩
- Agreement regarding the complete and final settlement of the question of reparations, signed at The Hague, January 20, 1930, League of Nations Treaty Series, vol. civ, pp. 243, 328.↩
- See vol. iii, pp. 106 ff.; for text of the agreement signed at Washington, June 23, 1930, see Annual Report of the Secretary of the Treasury for the fiscal year ended June 30, 1930 (Washington, Government Printing Office, 1931), p. 341, or League of Nations Treaty Series, vol. cvi, p. 121.↩
- Foreign Relations, 1929, vol. ii, p. 1070.↩
- See Great Britain, Cmd. 3343 (1929): Report of the Committee of Experts on Reparations, p. 10.↩