Editing 76-10-B3 (section)

=== Transcript ===
A nationally syndicated columnist, Lawrence Fertig, back in 1961 wrote a column
that became front page news in some papers. Among other things, he told of an
economic report written in 1951 which had been classified "Secret" for ten years. It
was the report of a group of American economists who in 1947 and '48 were in
Germany to tell that defeated, war-devastated country how to get back on its feet.
Many of these economists were advisers to our own government and, indeed have
continued to influence policy over the years even to the present. When the report
was declassified, Mr. Fertig revealed that our traveling think-tank had told German
Finance Minister Erhard in 1948 that he had "an excessive concern for price
stability"; that Germany should go in for deliberate planned inflation and easy
(meaning printing press) money. Minister Erhard was also told that interest rates
high enough to encourage personal savings were bad and would limit investment.

When the Germans allowed fast depreciation of capital investment and tax breaks
to business and industry to increase their investment in new equipment and plants,
the Americans said it was "an expenditure of tax funds the government should
collect instead". Most significantly, the Germans were literally told that
capitalism as we have known it here in our country - capital investment in industry
- was no longer the modern way. Always the Americans urged that government
should be dominant in the economy. Well the American economists, having
imparted their wisdom, returned to America and West Germany became the
economic miracle of our time. Never had a nation so totally destroyed, recovered
so quickly and become so prosperous. And for about ten years people kept asking,
"What is their secret? How did they do it"?

Mr. Fertig made their secret public with the publishing of the report. Once
Germany was back on it's feet, Finance Minister Erhard revealed that his
government had listened to all the economic advice from the American experts and
then taken an opposite course. They maintained a sound currency, a balanced
budget, eliminated all price controls, provided, as I've said, strong incentives to
business and individuals to save and invest; in short they rejected a government-directed
economy and encouraged private enterprise.

Now - as to learning from history, it seems the latest American official visit to
Germany may have attempted to repeat some economic advice similar to the kind
given in 1948. At any rate, the West German Prime Minister made a polite
statement which indicated Germany would continue on it's own course. As I've
said, some of those economists who were proven so wrong are still advising our
government to do the things Germany refused to do. Germany, it's great cities
bombed into rubble, it's industrial capacity at near zero, came back to be one of
the most stable, prosperous nations in the world. The United States, victorious, it's
industrial capacity untouched, took the advice the Germans rejected and now has
economic problems, inflation, unemployment and a national debt of incomprehensible
size. Worst of all, Washington still turns to those same economists for advice.

This is Ronald Reagan.

Thanks for listening.
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