Albrecht Ritschl is professor of economic history at the London School of Economics and a member of the advisory board to the German ministry of economics.

OLD myths die hard, and the Marshall Plan is one of them. In the New York Times of June 12th German economist Hans-Werner Sinn invokes comparisons with the Marshall Plan to defend Germany's position against Eurobonds, the pooling of sovereign debt within the euro zone. His worries are understandable, but the historical analogy is mistaken, and the numbers mean little. All this unnecessarily weakens his case.

Mr Sinn argues against Germany's detractors that Marshall Aid to postwar West Germany was low compared to Germany's recent assistance, debt guarantees etc. to Greece. While Marshall Aid cumulatively amounted to 4% of West German GDP around 1950 (his figure of 2% is too low but that doesn't matter), recent German aid has exceeded 60% of Greece's GDP, and total European assistance to Greece is now above 200% of Greek GDP. That makes the Marshall Plan look like a pittance. And it strips all the calls for German gratitude in memory of the Marshall Plan off their legitimacy. Or does it?

What Mr Sinn is invoking is just the outer shell of the Marshall Plan, the sweetener that was added to make a large political package containing bitter pills more palatable to the public in Paris and London. The financial core of the Marshall Plan was something much, bigger, an enormous sovereign debt relief programme. Its main beneficiary was a state that did not even exist when the Marshall Plan was started, and that was itself a creation of that plan: West Germany.

At the end of World War II, Germany nominally owed almost 40% of its 1938 GDP in short-term clearing debt to Europe. Not entirely unlike the ECB's Target-2 clearing mechanism, this system had been set up at Germany's central bank, the Reichsbank, as a mere clearing device. But during World War II, almost all of Germany's trade deficits with Europe were financed through this system, just as most of Southern Europe's payments deficits towards Germany since 2008 have been financed through Target-2. Incidentally, the amount now is the same, fast approaching 40% of German GDP. Just the signs are reversed. Bad karma, that, isn't it.

Germany's deficits during World War II were mostly robbery at gunpoint, usually at heavily distorted exchange rates. German internal wartime statistics suggest that when calculated at more realistic rates, transfers from Europe on clearing account were actually closer to 90% of Germany's 1938 GDP. To this adds Germany's official public debt, which internal wartime statistics put at some 300% of German 1938 GDP.

What happened to this debt after World War II? Here is where the Marshall Plan comes in. Recipients of Marshall Aid were (politely) asked to sign a waiver that made U.S. Marshall Aid a first charge on Germany. No claims against Germany could be brought unless the Germans had fully repaid Marshall Aid. This meant that by 1947, all foreign claims on Germany were blocked, including the 90% of 1938 GDP in wartime clearing debt.

Currency reform in 1948—the U.S. Army put an occupation currency into circulation, and gave it the neutral name of Deutsche Mark, as no emitting authority existed yet—wiped out domestic public debt, the largest part of the 300% of 1938 GDP mentioned above.

But given that Germany's debt was blocked, the countries of Europe would not trade with post-war Germany except on a barter basis. Also to mitigate this, Europe was temporarily taken out of the Bretton Woods currency system and put together in a multilateral trade and clearing agreement dubbed the European Payments Union. Trade credit within this clearing system was underwritten by, again, the Marshall Plan.

In 1953, the London Agreement on German Debt perpetuated these arrangements, and thus waterproofed them for the days when Marshall Aid would be repaid and the European Payments Union would be dissolved. German pre-1933 debt was to be repaid at much reduced interest rates, while settlement of post-1933 debts was postponed to a reparations conference to be held after a future German unification. No such conference has been held after the reunification of 1990. The German position is that these debts have ceased to exist.

Let's recap. The Marshall Plan had an outer shell, the European Recovery Programme, and an inner core, the economic reconstruction of Europe on the basis of debt forgiveness to and trade integration with Germany. The effects of its implementation were huge. While Western Europe in the 1950s struggled with debt/GDP ratios close to 200%, the new West German state enjoyed debt/ GDP ratios of less than 20%. This and its forced re-entry into Europe's markets was Germany's true benefit from the Marshall Plan, not just the 2-4% pump priming effect of Marshall Aid. As a long term effect, Germany effortlessly embarked on a policy of macroeconomic orthodoxy that it has seen no reason to deviate from ever since.

But why did the Americans do all this, and why did anyone in Europe consent to it? America's trauma was German reparations after World War I and the financial mess they created, with the U.S. picking up the bill. Under the Dawes Plan of 1924, Germany's currency had been put back on gold but Germany went on a borrowing binge. In a nutshell, Germany was like Greece on steroids. To stop this, the Young Plan of 1929 made it riskier to lend to Germany, but the ensuing deflation and recession soon became self-defeating, ending in political chaos and German debt default. A repetition of this the Marshall Planners were determined to avoid. And the U.S. led reconstructions of Germany and Japan have become the classical showcases of successful liberal intervention.

So does Greece, does Southern Europe need a Marshall Plan? Is Sinn right to say that Greece has already received one—or a 115-fold one, as he argues? The answer to first question may be yes, in the limited sense that a sweeping debt relief programme is needed. The answer to the second question is a resounding no. Greece has clearly not received a Marshall Plan, and certainly not 115 of them. Nor has anyone else. As far as historical analogies go, what Southern Europe received when included in the euro zone was closer to a Dawes Plan. And just like in Germany in the 1920s, the Southern Europeans responded with a borrowing spree. In 2010 we didn't serve them a Marshall Plan either, but a deflationary Young Plan instead.

This latter-day Young Plan is not even fully implemented yet. But we see the same debilitating consequences its precursor had around 1930: technocratic governments, loss of democratic legitimacy, the rise of political fringe parties, and no end in sight to the financial and economic crisis engulfing these states, no matter how many additional aid packages are negotiated. Woe if those historical analogies bear out.

Europe should learn from history. But it needs to learn fast. There might be no recovery unless debts are reduced to manageable proportions. That is what ended the Great Depression in Europe in the 1930s, and that is what in all likelihood is needed again. Professor Sinn is right to resolutely ask for action on this, even if his take on the Marshall Plan is wrong.