The 1930s
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| Participants of the first BIS Annual General Meeting, 1931 |
Despite the breakdown of the international monetary system caused by the Great Depression and growing political tensions in the 1930s, central bank Governors continued to meet in Basel each month up until the beginning of the Second World War. Although the scope for effective international cooperation was limited during this period, the BIS offered an environment in which central bankers could maintain active contact and exchange views.
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| Cartoon showing central bank Governors parading at the 1933 London World Economic Conference before conference president Ramsay MacDonald. Members of the BIS Management are depicted in the crowd. |
The Bank continued to offer a range of financial services to central banks and quickly acquired a solid reputation for economic research and analysis.
The Second World War
With the outbreak of war in 1939, it was no longer possible for representatives of belligerent countries to attend BIS meetings, even in neutral Switzerland. But Board members were convinced that the BIS needed to be kept alive to assist in financial and monetary reconstruction after the war.
To provide for the Bank's survival, the Board decided to suspend all Board meetings for the duration of the war. It also adopted a neutrality declaration excluding banking operations that might benefit one belligerent party to the detriment of another. The BIS maintained its banking services to assist central banks and fulfil the Bank's own obligations so far as was consistent with neutrality.
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| Press clipping, 1940 |
Wartime conditions and the constraints of the neutrality declaration resulted in a rapid decline in BIS banking operations. Monthly turnover plummeted to a small fraction of prewar activity.
Throughout the war, the BIS continued to collect interest payments due by Germany in respect to the investments the BIS had made in the German economy in 1930/31.
Investigations after the war revealed that the German Reichsbank had used large quantities of gold stolen from central banks in the occupied territories to make wartime payments to a number of institutions including the Swiss National Bank and the BIS. During the war, the BIS received, by way of German interest payments, 3.7 tonnes of such gold which, it later emerged, had been taken from the central banks of Belgium and the Netherlands. The BIS cooperated fully with the postwar investigations and returned all this gold by 1948.
Origins
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Postwar and Bretton Woods 
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| For more on the BIS's history, read Gianni Toniolo (with Piet Clement), Central Bank Cooperation at the Bank for International Settlements, 1930-1973, Cambridge University Press, Cambridge-New York, 2005. |
