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Cold-War Economics: The Use of Marshall Plan Counterpart Funds in Germany, 1948–1960

Published online by Cambridge University Press:  08 January 2013

Armin Grünbacher
Armin Grünbacher*
Affiliation:
The University of Birmingham
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Extract

The originally propagated view that the Marshall Plan was an altruistic endeavor through which the U.S. saved Europe from collapse and starvation has long been dismissed and replaced with a more realistic approach to international affairs. Whereas Realpolitik and the perception of the evermore menacing Cold War made it inevitable that Marshall Plan aid and its counterpart funds would become a weapon in the ideological conflict of the two political ideologies, the overwhelming body of literature looks at the Marshall Plan either from a political and diplomatic or from an economic viewpoint. Beyond general statements that the Marshall Plan was used as a weapon in the Cold War, relatively little research has been carried out into how this weapon was wielded. This is even truer for the counterpart funds, which are usually only mentioned in passing in the literature, if at all. This is despite the fact that Marshall Aid in general and the counterpart funds in particular had actually quite a significant impact in Cold-War propaganda and economic matters in Western Europe, which most likely contributed to the declining appeal of communism. This article will look at the specific action of American and, after September 1949, German authorities in the use of counterpart funds to demonstrate their significance.

Type
Articles
Information
Central European History , Volume 45 , Issue 4 , December 2012 , pp. 697 - 716
Copyright
Copyright © Conference Group for Central European History of the American Historical Association 2012

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References

1 The best-known examples for the political approach are Hogan, Michael, The Marshall Plan: America, Britain, and the Reconstruction of Europe 1947–1952 (Cambridge and New York: Cambridge University Press, 1987)CrossRefGoogle Scholar; and Hardach, Gerd, Der Marshall Plan. Auslandshilfe und Wiederaufbau in Westdeutschland 1948–1952 (Munich: dtv Verlag, 1994)Google Scholar. Milward, Alan, The Reconstruction of Western Europe 1945–1951 (London: Routledge, 1984)Google Scholar; and Wexler, Immanuel, The Marshall Plan Revisited: The European Recovery Program in Economic Perspective (Westport, CT, and London: Greenwood Press, 1983)Google Scholar are best for the economic perspective.

2 For a proper explanation, see Djelic, Marie-Laure, Exporting the American Model: The Post-War Transformation of European Business (Oxford and New York: Oxford University Press, 1998), 188–93CrossRefGoogle Scholar; or Grünbacher, Armin, Reconstruction and Cold War in Germany: The Kreditanstalt für Wiederaufbau, 1948–1961 (Aldershot: Ashgate, 2004), esp. 53–56Google Scholar.

3 Brown, William A. and Opie, Redvers, American Foreign Assistance (Washington, D.C.: The Brookings Institute, 1953), 244Google Scholar.

4 Hardach, Der Marshall Plan, 273 f.

5 Brown and Opie, American Foreign Assistance, 78 f, 188.

6 Grünbacher, Reconstruction, 54. For the Economic Cooperation Agreement between the United States of America and the Federal Republic of Germany, see Bundesgesetzblatt, vol. I (1950): 9 ff., also for the following details.

7 Thomas, Evan, The Very Best Men. Four Who Dared: The Early Years of the CIA (New York: Simon & Schuster, 1995), 40, 62, 87Google Scholar; Hersh, Burton, The Old Boys: The American Elite and the Origins of the CIA (St. Petersburg, FL: Tree Farm Books, 1992, 2002), 220Google Scholar.

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10 Bundesgesetzblatt (1950). For the differences to the agreements with France and Great Britain, see Bundesarchiv Koblenz, Z 14/173, letter Deutsches Büro für Friedensfragen to Verwaltungsrat des Vereinigten Wirtschaftsgebietes, September 22, 1948; and letter Bank deutscher Länder to Vorsitzender des Verwaltungsrates des Vereinigten Wirtschaftsgebietes, September 28, 1948.

11 Dickertmann, Dietrich, Öffentliche Finanzierungshilfen. Darlehen, Schuldendiensthilfen und Bürgschaften als Instrumente des finanzwirtschaftlichen Interventionismus (Baden Baden: Nomos, 1980), 293Google Scholar, elaborates on the size of the ERP funds. The Federal Minister for the Plan, Marshall, ed., Recovery under the Marshall Plan 1948–52 (Bonn: Federal Ministry for the Marshall Plan, 1953), 24Google Scholar, lists the deliveries from GARIOA. GARIOA funds which arose prior to the currency reform of June 20, 1948, became invalid because of the reform. For details, see Grünbacher, Reconstruction, 57 ff.

12 See, for example, Wall, Irvin M., The United States and the Making of Postwar France, 1945–1954 (Cambridge: Cambridge University Press, 2002)Google Scholar, chap. 6, 158 ff.

13 Grünbacher, Reconstruction, 80.

14 Kreditanstalt für Wiederaufbau, Jahresberichte (1952), 33; Kreditanstalt für Wiederaufbau, Historisches Archiv (henceforth KfW HA), BS 81, letter by Michael Harris to Minister Blücher, March 17, 1953.

15 For a translation of the BDI memo, see Grünbacher, Armin, The Making of German Democracy: West Germany during the Adenauer Era, 1945–1965 (Manchester: Manchester University Press, 2010)Google Scholar, 167 f. KfW HA, BS 81, memo dated September 2, 1954.

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25 Grünbacher, Reconstruction, 174.

26 Ibid., 175.

27 KfW HA, BA-Sch 85c, Memo from the Ministry for the Marshall Plan, Finanzierungsstand des 100 m Bergarbeiterwohnungsbaus, February 6, 1952; Grünbacher, Reconstruction, 175 f.

28 Schulz, Günter, Wiederaufbau in Deutschland. Die Wohnungsbaupolitik in den Westzonen und der Bundesrepublik von 1945 bis 1957 (Düsseldorf: Droste, 1994), 336Google Scholar.

29 KfW HA, VS 67/II, BiCO Finance Group memorandum FIN 26563/1, Problems in Housing Construction.

30 KfW HA, BA Sch 83b, Richtlinien für die Gewährung von Hypotheken Darlehen aus dem Sofortprogramm, September 15, 1949.

31 Kreditanstalt für Wiederaufbau, Jahresberichte (1949), 29 f.

32 Esposito, Chiarella, America's Feeble Weapon: Funding the Marshall Plan in France and Italy, 1948–1950 (Westport, CT, and London: Greenwood Press, 1994)Google Scholar. For the German way of fund allocation, see Grünbacher, Reconstruction.

33 KfW HA, BA Sch83b, memo on meeting with Mr. Butler, ECA Housing Section, Dec. 19, 1950.

34 KfW HA, BA Sch83b, appendix to a letter from the KfW to the federal Housing Ministry, Jan. 3, 1951; KfW HA, Prot 10–1, Protokoll der 19. Sitzung, TOP 1.

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37 Grünbacher, Reconstruction, 185 f., 188.

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39 Bundesgesetzblatt, vol. I (1950), 9 ff., Economic Cooperation Agreement, Art. 7.

40 National Archives, RG 469, Record of the U.S. Foreign Assistance Agencies 1948–61, Office of European Operations, German Division, subject files, box 4, letter from the German Mission to the MSA (Fitzgerald), March 2, 1953.

41 StEG was an agency set up in the American zone to “demilitarize” and sell old military equipment, first from the German and then from the U.S. Army. Grünbacher, Reconstruction, 197.

42 Rogge, Peter G., Die amerikanische Hilfe für Westberlin von der deutschen Kapitulation bis zur westdeutschen Souveranität (Tübingen: J. C. B. Mohr, 1959)Google Scholar, 167 ff.

43 Brown and Opie, American Foreign Assistance, 247, 421 f; The Federal Minister for the Marshall Plan, ed., Recovery under the Marshall Plan, 215.

44 Grünbacher, Reconstruction, 198 f.

45 Pisani, The CIA, 95.

46 The Federal Minister for the Marshall Plan, ed., Recovery under the Marshall Plan, 215.

47 Rogge, Die amerikanische Hilfe, 140; Grünbacher, Reconstruction, 48 and passim.

48 Grünbacher, Reconstruction, 199 ff.

49 Benz, Wolfgang, Die Gründung der Bundesrepublik. Von der Bizone zum souveränen Staat, 3rd ed. (Munich: dtv Verlag, 1989), 9Google Scholar.

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51 Kreditanstalt für Wiederaufbau, Jahresberichte (1955), 43; and other years passim.

52 Braunthal, Gerad, The Federation of German Industry in Politics (Ithaca, NY: Cornell University Press, 1965), 228Google Scholar; Harries, Heinrich, Wiederaufbau, Welt und Wende. Die KfW eine Bank mit öffentlichem Auftrag (Frankfurt am Main: Fritz Knapp Verlag, 1998), 57Google Scholar.

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54 Deutsche Bundesbank, Historisches Archiv, B 330/3338, Protokoll der 6. Sitzung des (KfW) Kreditbewilligungs-Ausschusses, TOP 1; Grünbacher, Reconstruction, 215.

55 KfW HA, BS 73, unmarked memos by the Economics Ministry, dated August 7, 1950; Wiederaufbau, Kreditanstalt für, Jahresberichte (1950), 28Google Scholar; (1951), 31, 35.

56 Kreditanstalt für Wiederaufbau, Jahresberichte (1953), 44; (1954), 62.

57 See, for example, Foreign Relations of the United States 1958–1960, vol. IX, 692 ff., letter from Eisenhower to Adenauer, October 7, 1960.

58 Under the doctrine, West Germany would terminate diplomatic relations with any country that recognized the GDR since the Adenauer government regarded itself as the only legitimate representative of the whole of the German people. As one of the “Big Four,” the Soviet Union was declared an exception and excluded from the rule. The doctrine was applied in 1957 against Yugoslavia and in 1963 against Cuba; see Grünbacher, The Making of German Democracy, 191 f, 195 f.

59 Kreditanstalt für Wiederaufbau, Jahresberichte (1956), 45 f.; (1957), 48 f.; (1958), 48 f.

60 In an earlier but smaller case, the KfW had financed export loans to Yugoslavia from its own sources raised on the capital market; see Grünbacher, Reconstruction, 225 ff.

61 Kreditanstalt für Wiederaufbau, Jahresberichte (1959), 52 ff.; Grünbacher, Reconstruction, 234 ff.

62 Grünbacher, Armin, “Profits and Cold War—Politically Motivated Export Finance in West Germany during the 1950s: Two Case Studies,” German Politics 13, no. 4 (Dec. 2001)Google Scholar.

63 Some aspects, in particular the financing of the CIA, deserve further research.

64 Kreditanstalt für Wiederaufbau, Jahresberichte (1953), 61.

65 Wall, Postwar France, 174.