Early FRG economy

Question 1

How did West Germany benefit from the Nazi legacy? (Speer)

Answer 1

Albert Speer introduce a range of administrative measures when running the war economy from 1942 to 1945

Question 2

What land did West Germany inherit?

Answer 2

The industrially strong Rhineland area. This had already helped make Germany the world’s second largest economy before 1939.

Question 3

How did the 131 Law help Germany?

Answer 3

Many of the planners and managers who went on to high positions in post-war West German business and government got their start under Hitler.

Question 4

How did the recovery of the 1930s benefit West Germany?

Answer 4

The investments made by the Nazis in communications, vehicle manufacture, optics, chemicals and light engineering. The essential infrastructure of German business survived the war, and German products were typically high value and technically advanced.

Question 5

How did allied restrictions on West Germany’s military benefit its economy?

Answer 5

Germany was thoroughly demilitarised after 1945 and barred from military spending; Britain, spent about 7 per cent of GDP per year on defence spending and suffered.

Question 6

How did losing factories to the war and reparations eventually benefit West Germany?

Answer 6

Brand new complexes could be built to incorporate all the latest technology

Question 7

Why did the FRG have plentiful labour resources?

Answer 7

Millions of refugees, particularly from territories incorporated into Poland and others ‘escaping’ the Soviet Zone, flooded into West Germany

Question 8

How did West Germany’s loss of colonial power benefit its economy?

Answer 8

West Germany had no colonies to sustain and did not have to lay aside large amounts of money for rearmament

Question 9

What happened in 1948?

Answer 9

The currency reform

Question 10

What were the Marshall Plan funds?

Answer 10

$1.5 billion over the 1948-52 period

Question 11

How did the currency reform and Marshall Plan funds help West Germany?

Answer 11

Helped the FRG to buy essential equipment and expand heavy industry

Question 12

How did Adenauer gain further American support?

Answer 12

Adenauer was extremely clever at ‘playing the Cold War card’. The West German economy benefited hugely from American aid and American political backing

Question 13

What was important about the period of Allied occupation.

Answer 13

The British and Americans had been keen to listen to the new economic ideas of German professors, provided a foundation for growth. For example, wage controls had been removed, income tax reduced, major industries decentralised and credit schemes for small industries set up

Question 14

How was Adenauer as a leader good for the economy?

Answer 14

He provided stable political leadership under which the economy could flourish. Though Erhard found Adenauer a difficult and frustrating leader to deal with, he depended upon Adenauer’s ability to dominate West German politics.

Question 15

How did Erhard benefit the West German economy?

Answer 15

He was a highly qualified economist who had already gained great experience in running economic affairs under the Allied occupation from 1945. He was successful partly through sheer continuity - he was in post long enough for his policies to be thoroughly embedded

Question 16

What was Erhard’s approach to economics?

Answer 16

Forwarded his ‘social market economy’ ideals. Private businesses were free to set their own prices and wages and develop in response to market forces, provided they acted within a framework laid down by the government. The state would regulate where necessary to ensure fair competition and fair labour relations.

Question 17

What was Erhard’s Investment Aid Law?

Answer 17

An efficient way of linking state resources to the free business economy. Government subsidies were provided to aid heavy manufacturing which was picking up less quickly than consumer industries.

Question 18

What was Adenauer’s European policies?

Answer 18

Sought to cooperate with the French and was anxious to reintegrate the FRG into Europe. West Germany thus became a founder member of the European Coal and Steel Community in 1951 and, from 1957, the European Economic Community. This allowed Germany to gain the maximum advantage from growing world trade.

Question 19

How did Germany’s post-war (WW2) situation benefit them?

Answer 19

Starting from a low level of production, growth was almost bound to be strong. This was helped by a huge demand (both at home and abroad) for consumer goods that had not been available during the war years, and for rebuilding.

Question 20

What was the impact of the Korean War in 1950 on the German Economy?

Answer 20

Brought a sharp rise in demand for German exports and there was plenty of ‘underutilised’ capacity in Germany to satisfy this demand.