Cash-strapped Berlin stalked by 450-year-old debt

BERLIN Thu Jul 19, 2012 2:34am EDT

A combine harvester unloads rye on a trailer in a field near the town of Mittenwalde in Brandenburg state some 50 km south of Berlin July 30, 2003.

A combine harvester unloads rye on a trailer in a field near the town of Mittenwalde in Brandenburg state some 50 km south of Berlin July 30, 2003.

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BERLIN (Reuters) - The sleepy hamlet of Mittenwalde in eastern Germany could become one of the richest towns in the world if Berlin were to repay it an outstanding debt that dates back to 1562.

A certificate of debt, found in a regional archive, attests that Mittenwalde lent Berlin 400 guilders on May 28 1562, to be repaid with six percent interest per year.

According to Radio Berlin Brandenburg (RBB), the debt would amount to 11,200 guilders today, which is roughly equivalent to 112 million euros ($136.79 million).

Adjusting for compound interest and inflation, the total debt now lies in the trillions, by RBB's estimates.

Town historian Vera Schmidt found the centuries-old debt slip in the archive, where it had been filed in 1963. Though the seal is missing from the document, Schmidt told Reuters that she was certain the slip was still valid.

"In 1893 there was a debate in which the document was examined and the writing was determined to be authentic," Schmidt said.

Schmidt and Mittenwalde's Mayor Uwe Pfeiffer have tried to ask Berlin for their money back. Such requests have been made every 50 years or so since 1820 but always to no avail.

Reclaiming the debt would bring significant riches to Mittenwalde, a seat of power in the middle ages, which now has a population of just 8,800. Red brick fragments of medieval fortifications still dot the leafy town centre.

The town's Romanesque church was once the provost seat for Paul Gerhardt, one of Germany's most prolific hymn writers. Gerhardt, who lived there briefly in the 17th century, is the only noted Mittenwalde resident to date.

Schmidt and Pfeiffer met with Berlin's finance senator Ulrich Nussbaum, who ceremonially handed them a historical guilder from 1539. The guilder was put in a temporary display at the Mittenwalde museum.

"This case shows that debts always catch up with you, no matter how old they are," Nussbaum told the Berliner Zeitung paper.

The debt-laden German capital would have difficulty meeting Mittenwalde's demands anyway. According to a report released by the senate finance administration in June 2012, Berlin is already close to 63 million euros in the red.

($1 = 0.8188 euros)

(Reporting by Sophie Duvernoy, editing by Paul Casciato)

(This story was corrected to change years in the headline to 450 from 540)

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Comments (2)
GA_Chris wrote:
63 million? The Germans really need to learn how to get into debt properly from our US cities

Jul 19, 2012 6:41pm EDT  --  Report as abuse
pesach wrote:
451 years later, at 6% compounded interest, Berlin would owe to Mittenwalde precisely: 97,656,096,445,216 Guilder
(97 Trillion, 656 Billion, 96 Million, 445 Thousand, 216 Guilder)

In modern day currency, it can be converted based on the annual rent used in the “Augsburg Fuggerei”, which is to this day a Rhenish guilder (0.88 euros today).
i.e. 1 Guilder = 0.88 Euros.

Therefore…

97,656,445,216 Guilder = 85,937,364,871,790 Euro.
(85 Trillion, 937 Billion, 364 Million, 871 Thousand, 790 Euro)

Jul 21, 2012 11:32am EDT  --  Report as abuse
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