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Reviewed by:
  • Reconstruction and Cold War in Germany: The Kreditanstalt für Wiederaufbau (1948–1961), and: Settling Scores: German Music, Denazification, and the Americans, 1945–1953
  • Henry Burke Wend
Armin Grünbacher, Reconstruction and Cold War in Germany: The Kreditanstalt für Wiederaufbau (1948–1961). Burlington, VT: Ashgate, 2004. 278 pp. $99.95.
David Monod, Settling Scores: German Music, Denazification, and the Americans, 1945–1953. Chapel Hill: University of North Carolina Press, 2005. 325 pp. $45.00.

After 1945, the U.S. Cold War agenda altered the implementation of policies initially designed to reorient Germany’s economy and culture. Economically, the United States encouraged the reemergence of individuals and institutions that had dominated the German economy prior to World War II, albeit this time within a liberal international economic system. In cultural policy, U.S. officials curbed their attempts to remold German culture as the Cold War intensified.

The two books under review examine West Germany’s economic and cultural response to the Cold War and the new American hegemony. Armin Grünbacher argues that U.S. pressure on the Federal Republic of Germany (FRG) to synchronize its economic policies with the exigencies of U.S. Cold War policies strengthened institutions and industries that had been dominant before 1945, thereby militating against full economic liberalization. David Monod contends that America’s attempt to reorient German culture failed but did push some artists and musicians in new directions. Although the two books diverge in content and approach, the authors demonstrate that extreme traditionalism flavored the German reception of the American message.

Grünbacher’s study focuses on the Kreditanstalt für Wiederaufbau (KfW), a Hauptleihinstitut (main lending institute) established under the auspices of the Marshall Plan. Chartered in 1948, the KfW served as the repository for local currency counterpart funds deposited to match the dollar value of aid-in-kind delivered under the Marshall Plan. The KfW loaned these Counterpart Funds and subsequently cycled repayment and interest into the economy. During the early Cold War, the KfW not only served as an agent for economic reconstruction but often filled the financial breach in U.S.-inspired Cold War initiatives. KfW policies followed the path set by American Cold War policies first as a major player in pushing West Germany’s recovery and industrial contribution to Western defense and later as a financier of the FRG’s complicated reemergence in global trade.

From Grünbacher’s perspective, the KfW was not an American innovation. Rather, it was firmly rooted in Germany’s “statist and corporatist traditions” (p. 1). The personnel that manned the KfW, led by board chairman Hermann Abs, had dominated German banking circles before 1945. Moreover, the KfW’s policies undermined the liberalization of economic institutions and market relations in West Ger-many. The U.S. drive for FRG rearmament after 1950 influenced the activities of the KfW. Rearmament necessitated the revival of heavy and extractive industries. This, in turn, militated against the path for recovery that Economics Minister Ludwig Erhard had envisioned, one in which light industries and consumer industries would take a leading role. Grünbacher presents the 1951 Investitionshilfegesetz (Auxiliary Investment [End Page 126] Law, or AIL) as a case in point. Under American pressure to expand heavy industry for the sake of rearmament, the FRG government turned to industrialists to contribute money voluntarily for the expansion of the West German coal and steel industries. The AIL therefore levied taxes on FRG consumer industries for the sake of rearmament. The AIL, Grünbacher argues, reestablished the significance of heavy industry and its industrial organizations within the economy. This interpretation diverges from Wolfgang Zank’s explanation in “Dirigismus nach Erhards Art,” Die Zeit (Hamburg), 1 May 1992, p. 30. Zank argues that the AIL was really Erhard’s shrewd maneuver to avoid direct state intervention in the economy. Grünbacher persuasively demonstrates that the AIL ran counter to Erhard’s wishes.

Grünbacher’s other chapters chronicle how the KfW funded housing projects, aided industries in Berlin, and reoriented West German trade away from Eastern Europe and into the American-led Western world. In foreign aid, the KfW financed projects of dubious economic merit in Yugoslavia at the...


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