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450-Year-Old Debt. Trillions Owed. But Will German Village Get Repaid?

Sophie Duvernoy|Christian Science Monitor
Thursday, 19 Jul 2012 | 4:30 AM ET

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.

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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.

German Deputy Fin Min: Europe Will Give Money to Spanish State
"The decision of today is quite clear; there is no direct infusion into the Spanish banking system, the European partners will deliver the money to the State of Spain and they will inject the money into the banking system," Steffen Kampeter, Parliamentary Undersecretary of State at the German Ministry for Finance, told CNBC.

"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.


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