Kennedy’s Berlin visit, symbolically important as it was, could not alleviate the structural problems threatening West Berlin’s ability to hold its own as the industrialized world’s only walled city. As we have seen, logistical obstacles and political crises had undermined the economic viability of the western sectors of the city since the late 1940s, requiring rescue in the form of state subsidies, foreign aid, and special private investments. In the wake of Khrushchev’s 1958 Berlin ultimatum, Fritz Berg, president of Bundesverband der Deutschen Industrie, appealed for an “economic bridge” to West Berlin similar to the “air bridge” of 1948/49. After the Wall went up that bridge seemed more needed than ever. The Wall appeared when West Berlin had finally achieved full employment, so there was now an acute shortage of workers. Moreover, the large industries that had already moved their major operations out of Berlin—companies like Siemens and AEG—were not about to return to a city that was so vulnerable to further pressure from the Soviets. West Berlin’s political vulnerability also made it off-limits for the production of goods of military significance, including the high-tech gadgetry that was becoming the mainstay of the modern economy.
The Adenauer government was not anxious to pump new subsidies into a city identified so closely with the political opposition, but it felt it had to do so under the circumstances. In 1962 a comprehensive support package was approved, including direct subsidies, investment incentives, and tax breaks for companies operating in West Berlin. The package was renewed in subsequent years, and new subsidies were added. To help deal with the shortage of workers, the government imported thousands of foreign laborers, euphemistically called
To further assist Berlin, several federal agencies were moved to the city. Their employees received a 17 percent “Berlin supplement” on top of their regular salary. In the 1970s, about 40 percent of the city’s budget was covered by West German taxpayers; by the mid-1980s, that figure had jumped to 55 percent. At that point Bonn was pumping half a billion marks a year to Berlin in direct subsidies, and another 8 billion yearly in tax breaks, business credits, and salary bonuses. Bonn also paid a portion of the costs of keeping Allied troops and their dependents in the city.
The extensive subsidies stabilized the economic situation in West Berlin, but they could not prevent the city from losing ground relative to other parts of the country. Germany’s economic center of gravity shifted more decisively westward and underwent a division of labor: banking was now centered in Frankfurt; heavy industry in Essen and the Ruhr; publishing in Hamburg and Frankfurt; automobile manufacture in Stuttgart and Munich; international commerce in Düsseldorf; moviemaking, arms production, and the high-tech business in Swabia and Bavaria. While the lights of commerce continued to shine in West Berlin after August 1961, their brightness was impressive only when compared to the dim glow on the other side of the Wall.
The barrage of subsidies, moreover, encouraged a “Subventionsmentalität”—a growing sense of entitlement and complacency in the Spree metropolis. Some of the companies that operated there stayed afloat only because of the special support they received. West Berliners who wanted to be where the economic action was continued to abandon the city, leaving behind the less capable and the less ambitious. A city that had once boasted of being faster paced and more dynamic than anywhere else in Germany, if not the world, now took a secret pride in being more relaxed and easygoing than other German cities. Life in the walled island was turning out to be surprisingly
