Professor Henry A. Kissinger

April 28, 1965

Page 2

2. New pages 4-8 have been added to deal with the social market economy and the equity problem which the meeting felt should be done.

3. Page 20 has been rewritten, but that was already in the second version (it was the old page 17).

4. New pages 68-71 have been added to deal with structure changes.

5. New page 79-82 top have been added to deal with the whole problem of agriculture, the common grain price, and in particular the loss of freedom of action as the result of possible common economic policies.

6. Finally, page 83 has been substantially changed.

I think all these changes will meet the points which have been raised and I think the paper is now in pretty good shape. Incidentally, Günther Harkort wrote me that the fact that the common grain price is fixed in an accounting unit rather than in a particular monetary unit precludes *de facto* all exchange rate changes between common market partners and forces a common consideration of a great number of other economic policies. It is in this sense that we have dealt with the problem.

It turns out that our visit to Tunisia was so successful that AID wants us to go back again in June and the beginning of July for four to six weeks. After that I should be back in this country again, but I hope to have your answer regarding Karl Roskamp's need for the summer fairly soon. He expects to leave early in June.

With best regards, I am

WFS:ed

THE UNIVERSITY OF MICHIGAN
CENTER FOR RESEARCH ON ECONOMIC DEVELOPMENT

307 S. STATE STREET
ANN ARBOR, MICHIGAN 48104

WOLFGANG F. STOLPER, DIRECTOR
ASSOCIATE DIRECTORS,
RICHARD C. PORTER
MONTAGUE YUDELMAN

AREA CODE 313
TEL.: 764-9490

June 1, 1965

JUN 9 REC'D

Professor Henry A. Kissinger
Center for International Affairs
Harvard University
6 Divinity Avenue
Cambridge, Massachusetts 02138

Dear Professor Kissinger:

Thank you very much for your letter of May 26.

Unfortunately, I am not at all certain whether you received the corrected pages which are the result of the letter received from Harkort. I have made one more correction, in any case, by inserting a paragraph in the last page (84). A typist who has just left us has several times sent off letters without enclosure and therefore I am sending along another batch of the corrected pages for inclusion. If you did receive the earlier ones, the only new ones are pages 84 and 84a.

It is very kind of you to make $250 available for Roskamp for this summer which will do very nicely indeed. I would like to ask you, however, to keep this in escrow since there is a small possibility that Roskamp may go to East Africa during the next year and will not be available. In this case, I will still seriously consider undertaking the study myself together with Professor Kühler at Amherst but I will write you again within the next few weeks about the whole matter.

I am looking forward to hearing how the book is progressing. In the meantime, I am, with best regards

WFS:ed

June 10, 1965

Mr. Wolfgang F. Stolper
Center for Research on Economic Development
The University of Michigan
307 South State Street
Ann Arbor, Michigan

Dear Mr. Stolper:

In Professor Kissinger's absence,
I am writing to acknowledge your letter
of June 1st.

Thank you for sending the corrected
pages which had not been sent before. They
have been inserted in your manuscript which
now makes it complete.

Professor Kissinger will be back
in the office early in July and I will
bring your letter to his attention at
that time.

June 24, 1965

AREA CODE 313

TEL.: 764-9490

JUN 28 REC'D

Dear Professor Kissinger:

We received a short note from Professor Karl W. Roskamp requesting that on page 67, line 18 the sentence starting "Despite the adjustment in...." should be deleted. He asked that this be done to "save us some trouble later on."

Thank you in advance.

DT

September 8, 1965

I have looked through the last 20 pages of this manuscript, making small revisions where it seemed necessary, but trying to avoid any substantial re-phrasing and reorganization.

However, after reading the last part, and glancing quickly through the rest (as did my husband, whose main interest was international economics and EEC policies at the Business School, so is a bit more well-versed in the subject than am I--with my Ec. 1 "background!"), I did feel that several things were lacking in the essay.

The piece seems "too economic" for a book of this sort--that is, the authors use highly technical (and often unnecessary) terms without defining them adequately--paradoxically, this often makes their statements seem over-simplified, and because their reasoning is not fully explained, it often seems wrong, or open to debate at least.

They seem to have "bitten off more than they can chew." They try to cover everything and tend to dismiss the most complex and interesting problems in a sentence or two. To me it seemed unnecessary to spend so many pages on a minute description of the past, until 1958; many of the figures and examples they give are really unnecessary and instead of supporting the picture, merely detract from it. (the fact that Germany is now less dependent on the world economy because she imports only 13.9% of her GNP as compared to 14.2% in 1936, for example, needs some explanation). On the other hand, examples and explanations are often missing where they are needed (for instance, p. 72--specialization occurred among firms in the EEC. It would be interesting to note which firms and their impact on the German economy, cartel policy, etc. And, for example, a division of labor between French and Italian automobile manufacturers was negotiated which, in the long run, will make Volkswagen's position.)

Most people are familiar with Germany's rapid growth. In an essay of limited length, it might be well to begin with a brief factual summary of this, and then move into a discussion of the larger economic picture--why certain policies were pursued and others not during this period, and, even more, what are the prospects and difficulties for German growth in the future (more interesting, less well defined and more in keeping with the book). The substance of economic policies, their political origins and impact, is often overlooked.

The authors could study the economic aspect of topics mentioned in other essays in this volume. Bracher mentions the impact of farmers as a political lobby, which affects government economic policy and in turn influences EEC developments (And how much of German economic policy has been influenced by the EEC). Bracher mentions a comparison of the French economic council and the German

[LJ] 2-

situation. What about it in economic terms? In other words, what is the substantive *nature* of German economic policy--i.e., the influence of material well being as a prime political goal-- has action been conservative because of this (continuity?? cartel attitudes) or revolutionary (bringing the economy to the people to cement their loyalty?? In this context, a discussion of the very important corporate tax reform would be interesting-- intended to encourage popular stockholding in a society that has traditionally put its money in saving.)

In other words, the paper should try to give a "macroeconomic picture," focusing not on a summary of facts from 1945-1965 backed by a multitude of figures & examples, but should take some of the major economic policy problems and decisions and focus on them in depth.

I noted a few specific points as I went along.

1. on p. 67, he speaks summarily of the devaluation of the deutschmark, and on p. 74 states that in the future government intervention, as in the past, will be swift, imaginative and so successful that it won't have to be repeated.

The devaluation of the deutschmark was a dangerous and half-way measure. The govt. was well aware that, if it had to be done, it would only be meaningful if it were a 10% devaluation and not merely a 5% (as they did). Why was it that they picked this measure, unnecessary and dangerous for the German situation (though not for the pound). Will the conservative nature of economic policymaking have eventual detrimental effects? (effects on a future possible international currency of dollar, pound and DM?)

p. 67 (and other places) What exactly is the "unresolved conflict between Central Bank and Govt?" Why unresolved? and why did Germany choose monetary actions when they knew it wasn't as effective as fiscal. Political, traditional, economic reasons? (political influence of Central Bank?) Will such an attitude continue--and thereby undercut the rosy picture the authors paint for the German economy?

p. 77. They do mention the high degree of sophisticated technology (but I don't think they emphasize the remarkable quality of this enough) and that it allows flexibility & therefore strength. But is the German economic success founded underneath on conservatism in thinking which may not take advantage of such flexibility?

p. 67. They say high interest rates attracted new capital to Germany in a massive inflow. Uncertain if this inflow was massive, and most of it was in capital equipment investment not portfolio, which would therefore not be attracted to (or influence) interest rates.

p. 69 They state that Germany has always had much trade with the East, then state that East Germany substantially reoriented her trade to the east and Russia. This reasoning certainly needs some explanation.

-3-

p. 76. minor recessions in other countries have had singularly
little impact on Germany. True? Why? (they do mention that
1959 U.S. steel strike had an advantageous effect on Germany.
Certainly the reverse could also be true.)

p. 63. What exactly is the "official definition" of German
foreign aid? With regard to Grosser, Croan, Kaiser, etc. a
discussion of extent and impact of aid & trade with East Europe
(it was stated in other articles, too, that Bonn's economic
relations with the GDR were politically important. Here, a
few figures on magnitude of this & real significance in economic
terms might be interesting). Economic competition with France
in this area? What is German economic thinking on such
politico-economic matters? And is there going to be any
substantial revision in economic aid policy? Enlargement?

The impact of the EEC is not sufficiently analyzed--or taken
into account. What about EFTA and EEC--Germany's strong ties
with Britain and the north. How will changes in Germany's
national economic structure (centralized, decentralized, etc.)
affect the facility of EEC integration of national economies.

Agriculture is perhaps more important than he suggests. As he
points out, EEC enables a country to influence other nations'
economic policies to its own advantage. France did this
with respect to agriculture. How much has Germany done this
(they say such influence could enlarge Germany's freedom of
action but give no examples)--effect on EEC.

Have any other economists read this. Possibly some of the
authors' interpretations and explanations may just be wrong--or
at least need a good deal more explanation.

What are the future economic hopes and plans, now that
Germany has reached full employment and all the statistics given
in this paper? More emphasis on "social" or will the economic
policy fall behind political (a dilemma: material well being
is a political appeal, but it has so far been voiced in rather
conservative terms. Will it be able to keep pace? much of
the political appeal now depends on economic satisfaction.
Demands for better housing, more govt. & other scholarship aid
programs, foundations, etc.)

September 15, 1965

Mr. Wolfgang Stolper
Director
Center for Research on Economic Development
The University of Michigan
307 South State Street
Ann Arbor, Michigan 48104

Dear Mr. Stolper:

We have gone over your paper now and done some copyediting designed entirely to improve its readability. My only substantive suggestion would be whether you might consider moving the material from page 10 to page 13 into the beginning on page 3 as I have indicated.

There are a few other minor points. For example:

- On page 4 I think you ought to explain the word Ordo-Kreis to layman like me.

- On page 24 the numbers in the second paragraph do not seem to me to add up correctly.

- On page 34 I suggest eliminating the point about German defense expenditures at the end of the first full paragraph.

- On page 39 it would help a layman like me if you explained the significance of these numbers. I tended to get lost.

I also wonder whether some of your tables could be eliminated.

Let me tell you again how pleased I am with your contribution.

Kind regards.

Henry V. Kiehluger

Sincerely yours,

Kind regards.

contribution.

Let us tell you again how blessed I am with your
be eliminated.

I also wonder whether some of your tables could
tend to get lost.

You explained the significance of these numbers. I
-- On page 39 it would help a layman like me if
first full paragraph.

About German defense expenditures at the end of the
-- On page 34 I suggest eliminating the point
do not seem to me to add up correctly.

-- On page 34 the numbers in the second paragraph
word Order-Krate to layman like me.

I might consider moving the material from page 10 to page
My only substantive suggestion would be whether you
copyediting designed entirely to improve its readability.

Dear Mr. Stolper:

Ann Arbor, Michigan 48104
301 South State Street
The University of Michigan
Center for Research on Economic Development
Director
Mr. Wolfgang Stolper

September 13, 1962

October 27, 1965

Mr. Wolfgang F. Stolper, Director
Center for Research on Economic Development
The University of Michigan
307 S. State Street
Ann Arbor, Michigan 48104

Dear Mr. Stolper:

In Mr. Kissinger's absence I am
writing to acknowledge your letter of
October 15th.

Thank you for sending the revised
version of your piece for the German book.
I know he will be interested to see the
changes you have made.

He is expected to return to the
office around the middle of November and
I will bring your letter to his attention
at that time.

Secretary
Jean Blanchard

Sincerely yours,

at that time.
I will bring your letter to his attention
office around the middle of November and
He is expected to return to the
changes you have made.

I know he will be interested to see the
version of your piece for the German book.
Thank you for sending the revised
October 12th.

writing to acknowledge your letter of
In Mr. Kissinger's absence I am
October 12th.

Dear Mr. Stolber:

Ann Arbor, Michigan 48104
301 S. State Street
The University of Michigan
Center for Research on Economic Development
Mr. Wolfgang F. Stolber, Director

October 27, 1962

December 10, 1965

Dear Mr. Stolper:

I am sorry not to have replied
earlier to your letter of October 15th.

I will work over your manuscript
in the light of your comments and I
think we can accommodate most of them.

At any rate you will be sent a
final version before it goes to the
printer for any corrections you may
wish to make.

With kind regards.

Henry V. Klezinger

Sincerely yours,

With kind regards.

wish to make.
printer for any corrections you may
final version before it goes to the
At any rate you will be sent a
think we can accommodate most of them.
in the light of your comments and I
I will work over your manuscript
earlier to your letter of October 12th.

I am sorry not to have replied
earlier to your letter of October 12th.

Dear Mr. Stolper:

December 10, 1962

AREA CODE 313
TEL.: 764-9490

October 15, 1965

OCT 26 1965

Mr. Henry A. Kissinger
Center for International Affairs
Harvard University
6 Divinity Avenue
Cambridge, Massachusetts 02138

Dear Mr. Kissinger:

At long last, the manuscript has been completely reworked. I went over
it myself in detail and then once more with Roskamp. We have made de-
tailed comments on the editorial suggestions which I enclose for your
use and which I will also enclose with the manuscript. In my letter to
you I need only to comment on the following matters:

1. Two tables were suggested for possible omission. I would like to say that if for reasons of cost you still feel that they should be omitted I will of course not object to it in this case; whoever does the final copy editing has to make sure that the other table numbers are changed and references in the text are properly adjusted. However, I feel that the two tables really should be included as being very useful. The first one refers to population, employment and unemployment. These figures are referred to in several places in the text and I might say they are not always entirely easy to come by. The second table refers to sources of savings and to tax expenditures which are also quite difficult and inconvenient to come by. I should greatly prefer if the tables could be kept since they would round out the presentation which is designed to give a general picture. But I repeat that if you prefer to omit them, of course I will not object.

2. Your (or the editor's) most difficult suggestion relates to the discussion of the capital market. This is both a very crucial matter, and one which it is next to impossible to explain briefly as well as clearly. I find that even most Germans don't quite know how it works, and I am fortunate that Roskamp has made a special study of this problem and has some special inside information. We have tried to meet your wishes by inserting two additional paragraphs which briefly explain what the issue is all about, and we have therefore attempted to make this problem clearer. I am uncertain how far we will have succeeded. In a sense the whole essay is on that point. I hope however that you will now find it at least adequate.

3. I am only commenting otherwise on a few matters which you raised in your letter.

First, I have added a footnote to explain what the Ordo-Kreis is.
The explanation is vague but then so is the Ordo-Circle.

Mr. Henry A. Kissinger

October 15, 1965

Page 2

Secondly, the numbers on page 24 (old version) do not have to add up. I have, however, re-written the paragraph because obviously whenever you or the editorial reader have any questions there must be something in our formulation which does not make matters clear.

Thirdly, you suggested eliminating any comments on the German defense problem. I would like to compromise and put the comments into a footnote. The reason for keeping a reference to the matter is that it was originally suggested to me by my friend Harkort. It seems to me however, also interesting from another standpoint. The present difficulties which NATO has and the many unfortunate developments in Europe make, I think, such a footnote desirable. I would be happy to see your final editorial comments on it however.

4. Finally, I agree with most of the editorial comments made and have accepted most of the editorial suggestions, in particular to put the lengthy account of the East German developments into a footnote. Originally of course we had planned to write something on German developments as a whole, but the final manuscript has really been limited essentially to the Federal Republic with only occasional references to the GDR. There are a number of instances, however, where we have not felt that we could accept the editorial suggestions because they changed either the meaning or the emphasis too much from what we wanted to say. In all cases however we have assumed that if the editor wanted something changed the sentence needed re-formulation and more careful phrasing. We have attempted to do so. Details are explained in notes which we have written for the editor's convenience.

I hope that these notes make it possible for you to send the manuscript to the printer. No doubt you will let me know in due course when the book is expected to come out.

With best regards.

CC: Mr. Karl W. Roskamp

WFS:kw

AREA CODE 313
TEL.: 764-9490

February 2, 1966

FEB 7 1966

Mr. Henry Kissinger
Harvard University
Center for International Affairs
6 Divinity Avenue
Cambridge, Massachusetts 02138

Dear Mr. Kissinger:

I was very happy to get Bob Erwin's edited version of Roskamp's and my chapter. I worked like a beaver to get it out of the way because I am off tomorrow to Puerto Rico and I did not want to keep you and Bob Erwin waiting.

You can hardly know what it means to me to get this, as well as the planning book, out of the way. I have a great number of ideas on which I would like to work but which I have been unable to give my undivided attention as long as these two major studies were hanging over my head. I am now curious to know who will publish the book and when it may be expected to appear.

I thought I should also let you know my time table for the rest of this year. I expect to go, about April 1st, to Ethiopia for AID for a month. May 1 I am due in Heidelberg where I will be a Fulbright Professor during the summer semester ending on July 31st. I expect then to take a month's vacation followed by 10 days lecturing in Athens starting on September 1st. During the next year I will have a sabbatical and I will spend the period September 15 through November 15 at the Villa Serbelloni at Bellagio, which you know so well, hopefully reading in peace and working on some theoretical ideas I have. The second semester of the academic year, 1966-67 I expect to spend at the IBRD in Washington. I wondered whether I may raise (to me) a slightly embarrassing question regarding the honorarium. Since I have to pay for my family's trip to Europe it would help me very much if I could receive the honorarium sometime in March, and I know that Karl Roskamp feels the same way, having to meet the same problem. However, this is not a major matter and any arrangements you wish to make will be alright with me.

With best regards.

WFS: kw

FEB 1 1966

February 1, 1966

Professor Wolfgang F. Stolper
Center for Research on Economic Development
307 South State Street
Ann Arbor, Michigan 48104

Dear Wolfgang:

Enclosed is the edited copy of "Planning a Free Economy" for you to review before clean copies of the entire Germany volume in sequence are run off for all concerned—not least the publisher.

For the most part, editing here means establishing a uniform style, so that the book is not sprinkled at random with, for example, "D.D.R.," "DDR," "GDR," and "GPR" or "toward" here and "towards" there. A single style for citations is desirable. A close look at grammar, spelling, and rhetoric is in order. Etc. Occasionally questions come up—about a name, a note, a contradiction, and so on. Sometimes, although this is less true of your chapter than of others, substantive questions pop up. All these questions are written out on separate sheets attached to the relevant pages.

Please review the MS carefully, answering the queries on the sheets where they appear and using pencil and eraser to alter any passages which you believe you must improve. It would be a miracle if all my editorial changes were satisfactory. Nevertheless, if you decide to restore any sentences or write still a third version, please consider the full context and the variety of possible reasons why a change was made.

On p. 44, for example, the letters "A" and "B" serve to in-
struct the typist about the ~~specific~~ kind of heading.
(Incidentally, I think your table headings would look good
in more or less the style of those in Yudelman's AFRICANS
ON THE LAND—hence the otherwise peculiar capitalization.)

HARVARD UNIVERSITY

CENTER FOR INTERNATIONAL AFFAIRS

ROBERT R. BOWIE, Director
ALEX INKELES
HENRY A. KISSINGER
EDWARD S. MASON
THOMAS C. SCHELLING
RAYMOND VERNON

6 DIVINITY AVENUE
CAMBRIDGE 38
MASSACHUSETTS

February 11, 1966

Dear Wolfgang:

Thank you for reviewing the MS carefully. It's a good thing you noticed me napping on India, 40.1 per cent, etc. Incidentally, after looking in some dictionaries I restored that first "phenomenal." Reading lots of phenomenology had made me underestimate how long the word has been used in the sense you intend. Karl Roskamp has filled in the lacunae in the notes, so we are all set for retyping.

How I envy you a week of Caribbean sunshine!

cc: H. Kissinger

cc: H. Kraeger

Editor of Publications
Robert Erwin

Regards,

How I envy you a week of Caribbean amazement!

notes, so we are all set for rereading.
in the sense you intend. Karl Roekamp has filled in the lacunae in the
phenomenology had made me underestimate how long the word has been used
some dictionaries I restored that that "phenomenal." Reading lots of
me nabbing on Indis, 40.1 per cent, etc. Incidentally, after looking in
Thank you for reviewing the MS carefully. It's a good thing you noticed

Dear Wolfgang:

Ann Arbor, Michigan 48104
201 South State Street
Center for Research on Economic Development
Professor Wolfgang F. Stöber

February 11, 1969

RAYMOUD VERNON
THOMAS C. SCHELLING
EDWARD P. WYSON
HENRY V. KRIEGER
ALEX IKERLER
ROBERT J. BOWIE, Director

WYSSCHUNZELLS
CUMBRIDGE 38
D DIAMOND AVENUE

CENTER FOR INTERNATIONAL AFFAIRS
HARVARD UNIVERSITY

cc: H. Knauper

Yours truly,

final form.

meanwhile I will be sending you a copy of the complete manuscript in
manuscript form. We will be along the way when it is possible, and
negotiations are not far enough along to permit the protection of a
protection. Knauper is presently negotiating with Knauper, but the
Weltwirtschaftliche Archiv article.

Thank you for submitting the additional annotation for Table 8 and the
Weltwirtschaftliche Archiv article.

Dear Professor Knaepf:

Detroit, Michigan 48203
Wayne State University
Department of Economics
Professor Karl W. Knaepf

February 24, 1996

RYAMOND VENION
THOMAS C. SCHEFFING
EDWARD R. WYSON
HENRY V. KNAUPER
ALEX IKERLER
ROBERT R. BOWEN, Director

MICHIGAN UNIVERSITY OF AMERICAN
CUMBERLAND
6 DIVISION AVENUE

CENTRAL FOR INTERNATIONAL AFFAIRS
HARVARD UNIVERSITY

January 9, 1967

Professor Karl W. Roskamp
Department of Economics
Wayne State University
Detroit, Michigan 48202

Dear Professor Roskamp:

Thank you for your letter of
December 28. Harvard University Press
will begin printing the German book in the
spring. There have been numerable
delays, mostly due to the fact that I didn't
get my introduction written on time.

Dictated by Mr. Kissinger;
signed in his absence

signed in his presence
Dicted by Mr. Klaaijder;

Henry A. Klaaijder

Beat redsge,

det my introduction written on time.
delays, mostly due to the fact that I didn't
abring. There have been numerable
will begin printing the German book in the
December 28. Harvard University Press
Thank you for your letter of

Dear Professor Roaksamp;

Detroit, Michigan 48203
Wayne State University
Department of Economics
Professor Karl W. Roaksamp

January 9, 1967

WAYNE STATE UNIVERSITY

COLLEGE OF LIBERAL ARTS

DETROIT, MICHIGAN 48202

DEPARTMENT OF ECONOMICS

DEC 30 1966

Detroit 28. Dec. 1966.

To
Professor Henry A. Kissinger,
Center for International Affairs Harvard -University
6. Divinity Avenue
C a m b r i d g e , M a ss. 02138

Dear Professor Kissinger;

I visited several universities in West - Germany and West Berlin
during the last months. On this occasion some of my German collegues
inquired about the publication date of the Center for International
Affairs book on Germany. I promised to let them know after my return
to the United States.

Shortly before Xmas I met Wolfgang F. Stolper but he had not heard
from you in this matter thus he suggested that I should write to you.
I would very much appreciate your information to be able to tell my
German friends when they may be able to acquire this important study
on Germany.

As the end of the year is near I should like to wish you a very
healthy and happy 1967.