3c: Creating a Social Market Economy, 1945-89

Question 1

What was industrial output in 1947 compared to 1938?

Answer 1

It had only reached 33% of 1938 level.

Question 2

What was Marshall Aid?

Answer 2

Money given from the US in 1947 to help rebuild infrastructure. totalled $1.5 billion given to Germany 1948-52

Question 3

What was the value of surviving buildings in the Western zones in 1945?

Answer 3

RM 62 billion compared to RM51 billion in 1936 (potential growth in right circumstances).

Question 4

How many calories were most people surviving on post war?

Answer 4

1,500 calories

Question 5

Which factors led to economic growth?

Answer 5

Currency reform, Marshall Aid, abolition of price controls, still had economically valuable infrastructure.

Question 6

When was the Deutshmark introduced?

Answer 6

20th June 1948, in much smaller quantities (monetary supply contracted by 90%)

Question 7

What were wages converted as?

Answer 7

RM1 for DM1

Question 8

What rate were savings exchanged at?

Answer 8

RM 100 for DM 6.5 (so savings were lost)

Question 9

How much did industrial output increase by following the currency reform?

Answer 9

50%, as a result of willingness to invest in and produce goods.

Question 10

What was the effect of abolition of price controls in June 1948?

Answer 10

Ended barter economy, products were put up foe sale again in shops and the black market ended overnight.

Question 11

How much did taxes decrease by and why?

Answer 11

In 1950, those with average income of DM 2,400’s tax fell from 85% in 1948 to 18% (meant that workers had more money to spend). Tax remained the same for incomes above DM 6,000.

Question 12

How much did absenteeism decrease by after the economic reforms 1948 and why?

Answer 12

Fell from average of 9.5 hours to less than 2, as people didn’t have to spend time bartering or queuing. This resulted in a greater industrial output.

Question 13

How much did salaries rise by 1949-55?

Answer 13

80%

Question 14

What was the unemployment rate in 1950 and then 1960?

Answer 14

11% in 1950 to 1.3% in 1960

Question 15

What was the social market economy?

Answer 15

Businesses were allowed to develop independently and set their own prices, whilst the state provided welfare intervention.

Question 16

Which factors characterised the sustained economic growth of the 1950s?

Answer 16

• Unemployment reduced to 1.3% in 1960
• Rising exports
• Rising real incomes after 1952
• Growing investment
• New industrial centres eg the VW plant at Wolfsburg

Question 17

What was the Investment Aid Law of 1952?

Answer 17

Provided a government subsidy of DM3.2 billion to facilitate industrial investment.

Question 18

What are some examples of government policies of intervention?

Answer 18

• Work creation schemes
• Rapid rebuilding programme of infrastructure
• Reducing protective tariffs with the emergence of the ECSC and EEC
• 1957 anti-trust law to prevent cartels

Question 19

Which factors other than government intervention also had an impact on economic recovery?

Answer 19

• Growing world economy, able to export
• Limited defence spending
• Economic foundations eg good sea ports
• The Korean War 1950-53: produced armaments, increasing exports
• Economic integration

Question 20

What was the policy of co-determination?

Answer 20

Allowed workers to elect representatives to participate in the management of businesses. Maintained good relationship between workers and owners so wage demands were modest. The Confederation of Trade Unions developed idea of social partnership. Led to low levels of strikes and high industrial output.

Question 21

Where did the German economy rank globally by the 1960s?

Answer 21

Third largest globally

Question 22

When was the ‘economic miracle’?

Answer 22

1955-66, with an average economic growth rate of 8% in the period.

Question 23

When was full employment achieved?

Answer 23

1960s

Question 24

How many East Germans had fled to the FRG?

Answer 24

2 million, who also found employment

Question 25

How much of coal and iron production and electricity generating plants were owned or controlled by the government by the 1950s?

Answer 25

40% of coal and iron
66% of electricity generating plants

Question 26

When did the economic miracle grind to a halt?

Answer 26

1960s as a recession hit and growth slowed, leading to a shock wave among the citizens who were used to continued growth and prosperity.

Question 27

What was unemployment in 1966 and 1968?

Answer 27

3.2%, which fell to 0.8%. Although, despite being minor, the recession had a profound psychological impact.

Question 28

When did the economy go through a recession?

Answer 28

1965-69