MELCHIOR, CARL

(1871-1933)

banker and financial expert; partner in the Hamburg banking firm of M. M. Warburg. Born in Hamburg, he established his reputation before World War I by founding theHamburg-Marokko Gesellschaft, a firm that coordinated German industrial interests in Morocco. He was wounded in the war's opening days and thereafter reorganized Germany's unwieldy gov-ernment purchasing apparatus, smoothing the way for the importation of crucial foodstuffs.

From 1918 Melchior steadily accumulated an impressive diplomatic record. During the Armistice* he participated in complex talks aimed at ending the Allied blockade.* Via these negotiations he became friends with John Maynard Keynes, his British counterpart.With banking partner Max Warburg,* he was a financial advisor at Versailles in April 1919; he was among those who resigned rather than become party to the treaty. Later in 1919 he declined offers to become Finance Minister in favor of returning to banking (he had refused the same office in 1918). But in 1925, before Germany joined the League of Nations, he became the first German to serve with the League's finance com-mittee. In 1929 he sat with the delegation that negotiated revision of the Dawes Plan*; when the new Young Plan* established its Bank for International Settle-ments* (BIS), he was attached to the organization.

Melchior's most difficult assignment came in July 1931 when, with the col-lapse of a giant textile concern, a banking crisis was triggered by massive with-drawals from the Darmstadt National Bank (Danatbank" was among Germany's four largest depositories). Mediating between banking emissaries, the government of Heinrich Brüning,* and the Reichsbank, Melchior arbitrated a settlement guaranteeing Danatbank's deposits and salvaging Germany's finan-cial structure. His concurrent talks with bankers at the 1931 London Confer-ence* temporarily halted the withdrawal of foreign credits from Germany. When the BIS invoked its Special Advisory Committee at the London Conference to explore the option of converting a portion of Germany's short-term loans into long-term loans, Melchior was assigned to its membership. The committee pre-sented a report (the Layton-Wiggin Report) skillfully describing the vicious circle of Allied war debts, reparations,* and indebtedness that had provoked Germany's emergency. Late in 1931 the BIS asked Melchior to serve once again on its Special Advisory Committee; this time its recommendations led to the Lausanne Conference,* another gathering at which Melchior participated.

Melchior's position with the largely moribund BIS was revoked soon after Hitler* seized power. His death in November 1933 saved him from witnessing the liquidation of the Warburg Bank.