Marshall Plan In Germany Flush with Cash..

[Anonymous]

Marshall Plan still at work in Germany

Tue Oct 12, 9:40 AM ET Top Stories - Chicago Tribune


By Tom Hundley Tribune foreign correspondent

This is a story about your tax dollars at work--or, more accurately, your grandparents' tax dollars.


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On June 5, 1947, Secretary of State George Marshall gave a speech at Harvard University in which he outlined a bold plan to rebuild the war-shattered economies of Europe, including those of nations that had so recently fought against the U.S.


At first, the Marshall Plan, as it was soon to be called, got a cool reception. According to historian Curt Tarnoff, the country's mood was turning isolationist, Congress was dominated by budget-cutters and President Harry Truman was facing a tough election.


Giving money to Germany struck some as overly generous. Many Americans preferred the Morgenthau Plan. Treasury Secretary Henry Morgenthau proposed stripping Germany of all its industry and transforming it into a vast farm.


But Truman went ahead with the Marshall Plan, and over the next four years the United States provided $13.3 billion (about $90 billion in today's dollars) in economic aid to 16 European nations.


The bulk of it went to Britain, France and Italy. Germany, which got $1.39 billion, was the fourth-largest recipient. The offer of aid also was extended to Russia and its Eastern European satellites but was rejected on ideological grounds.


These days the Marshall Plan is widely revered as the wisest and most successful foreign policy initiative undertaken by any U.S. administration.


A little-known footnote is that even though the Marshall Plan formally expired in 1952, its dollars are still hard at work in Germany. Under the careful stewardship of successive German governments, the original $1.39 billion has grown into a $12 billion nest egg.


Proposal to use a few billion


This came to light recently when Finance Minister Hans Eichel suggested that a few billion from that fund might be used to ease the government's budget shortfall.


The German parliament "was not amused" by Eichel's proposal and has vowed to resist, said Sigrid Skarpelis-Sperk, a member of the parliamentary subcommittee that oversees the fund.


Most of the countries that received Marshall Plan money assumed they would never be asked to repay it. Over time, Britain, France and the others simply absorbed the funds into their national budgets.


But West Germany wasn't sure of its status, so it treated the money as a loan. In 1953, it was agreed that the Germans would repay one-third of their postwar debt to the U.S.


The West German government continued to use funds from the Marshall Plan--officially known as the European Recovery Program--to make low-cost loans to German industries while repaying the U.S. with funds from the federal budget.


Today, deep within the bowels of a former Prussian military hospital that now serves as the Ministry of Economics and Labor, the ERP lives.


"We're not allowed to spend this money, only to lend it. That's the whole trick," said Hermann Faas, director of small business financing for the ERP.


In the early days, the money was used to rebuild Germany's heavy industry and infrastructure. Later, the ERP functioned as a kind of German Small Business Administration, making loans to small and midsized start-ups. During the Cold War, it helped subsidize West Berlin.





Focusing on eastern Germany

After German reunification in 1990, the ERP focused its efforts on the former East Germany. In addition to lending money to businesses in the east, it also invested in environmental clean-up projects.

Since its inception, the ERP has made about $150 billion worth of loans to German businesses.

In the ERP's offices, there are no American flags, no bronze busts of Marshall, but according to Faas, the United States still gets credit for its postwar magnanimity.

"In all official statements, and whenever the minister visits towns in the east, we integrate this message: Here is the money the United States planned for you, but which you couldn't get because of the Iron Curtain," he said.

[Anonymous]

Now could have some money back to rebuld our railroads due to Hurrcane damage?

[tree68]

At least the money appears to be doing an honest day's work, and didn't just build opulent palaces, etc. And if the story is correct, they are paying (or have paid us) back for the loan. Can't hold that against them. It's a lot better that what happens to a lot of our foreign aid.