The Herrhausen Method: A Challenge to the Trans-Atlantic System

One may assume that the assassination of Deutsche Bank’s Alfred Herrhausen on Nov. 30, 1989, did not occur at the snap of a finger, but was planned and prepared over several weeks. The speech which Herrhausen was scheduled to give in New York on Dec. 4, “New Horizons in Europe,” with its straight challenge to destructive trans-Atlantic banking methods, was likely not known at the time the team of assassins went to work; however, two statements were known which Herrhausen gave in June and September, which contained the core components of what he would have said in New York, had he not been assassinated.

In an essay titled, “The Time Has Come — Debt Crisis at a Turning Point,” published by Germany’s leading business daily, Handelsblatt, on June 30, 1989, Herrhausen denounced the debt policies particularly of U.S. banks, as not working but only making the debtor nations’ situation worse as well as that of the creditor banks themselves. Instead, general debt write-offs of up to 70% including cuts in the interest paid of up to 50% for a period of 5 years, and the maturity of loans being extended to 25 or 30 years were the only things that would work, Herrhausen wrote. This approach, he insisted, would “enable the said (debtor) nations to reassign considerable resources that so far had been used to serve the debt, to instead be used such purposes that would serve the recovery of their domestic economies.” Herrhausen added that what debtor nations really needed was not fresh money, that is new debt, but “it would be better to say they need resources.” The net effect of this  “resources reallocation could during the first five years be bigger than the fresh money injections requested by them so far.” Herrhausen did not reference it directly, but what he proposed was the approach generally taken in the London Debt Agreement of 1953 that created an enormous relief for postwar Western Germany to get back on its feet and not collapse under the weight of the piled-up old debt. That Agreement had been negotiated by Deutsche Bank’s Hermann Josef Abs—the outstanding constructive banker who also played a role in promoting the Herrhausen’s career when he was still a young banker at the bank.

At a press conference Sept. 25, 1989, on the occasion of the World Bank meeting in Washington, D.C., Herrhausen presented the same arguments, pointing out that he very much hoped that other banks would follow the example of Deutsche Bank as a “debt reduction bank.” The unresolved payments problems of the debtor nations, along with problems resulting from debt imbalances in the United States itself and in Europe, Herrhausen warned, posed a systemic risk. Taken together with certain problems not solved in the Soviet Bloc even under the reforms of “Glasnost,” broad unrest, nationality frictions and “escalated conflicts erupting from that” could lead to very gloomy constellations, Herrhausen warned. He then proposed, for unstable Poland in particular, the creation of a special new bank in Warsaw, an “Agency for Reconstruction” which would make sure that new loans to the Polish economy would be used as the Marshall Plan money was used for well-defined  reconstruction in Germany and Europe after World War II.

With that, Herrhausen had addressed in his own words what Lyndon H. LaRouche had laid out in his own historic speech at the Kempinski Hotel in Berlin, on Oct. 12, 1988. That speech was being studied by many policymakers and bankers in the months following, and one may assume that Herrhausen had the text on his desk at some point as well.

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