Economic recovery

Question 1

What factors allowed for the ‘economic miracle’ between 1949 and 1963.

Answer 1

• The Nazi legacy
• German strength
• Erhard’s social market economy
• Adenauer
• Foreign input

Question 2

What (and when) was Erhard’s investment aid law? Why was this good?

Answer 2

• December 1951
• provided gov subsidies to aid the heavy manufacturing industry (as it was picking up less quickly than consumer industries).
• efficiently linked state resources to a free business economy.

Question 3

What about Erhard made him so economically effective?

Answer 3

• He was a highly qualified economist with experience running economic affairs under the Allied occupation from 1945.
• He was also just in post long enough for his policies to be thoroughly embedded, holding his position for 14 years.

Question 4

What were Erhard’s banking controls?

Answer 4

Ensured the maintenance of a strong currency through importing cheap materials and exporting expensive, good quality goods.

Question 5

What was Erhard’s economy called?

Answer 5

The social market economy

Question 6

What were Erhard’s social market economy ideals?

Answer 6

Private businesses free to set own prices and respond to market forces (within the gov framework). State regulates where necessary to ensure fair competition.

Question 7

What was the co-determination law? When?

Answer 7

• 1951
• Permitted workers in iron and steel some say in management decisions.
• Impacted 103 companies.

Question 8

How did Adenauer’s political dominance contribute to the economy?

Answer 8

• He provided a stable leadership under which the economy could flourish. Despite Erhard’s conflict with him, he needed him to dominate West German politics.

Question 9

How did Adenauer play the ‘cold war card’

Answer 9

The German economy was able to benefit massively from American aid and political backing as Adenauer had aligned West Germany with the West.

Question 10

What were the five Rs?

Answer 10

• Reconstruction
• Reintegration
• Restitution
• Restoration
• Labour Relations

Question 11

What was Reconstruction in Adenauer’s era?

Answer 11

4 million new homes by 1957.

Question 12

What was Reintegration in Adenauer’s era?

Answer 12

refugees gradually dispersed from ‘holding camps’

Question 13

What was Restitution in Adenauer’s era?

Answer 13

Compensation paid to individual Nazi victims.

Question 14

What was Restoration in Adenauer’s era?

Answer 14

1951- 131 law allowed former Nazis to be employed as civil servants, leading to the re-employment of over 150,000 Germans.

Question 15

What were Labour relations in Adenauer’s era?

Answer 15

low wage demands and low strike record in Adenauer’s time. Co-determination showed non-confrontational labour relations.

Question 16

How did Adenauer contribute to the economy through restoration?

Answer 16

The 1951 ‘131’ law allowed over 150,000 former Nazis to be re-employed as civil servants, contributing to the economy.

Question 17

How did Adenauer reintegrate the FRG into Europe? How did this benefit the economy?

Answer 17

West Germany joined the EEC in 1957, and became a founding member of the European coal and steel foundation in 1951. This allowed Germany to gain the maximum advantage from growing world trade.

Question 18

How did Germany benefit from the Nazi legacy?

Answer 18

• Employment of ex-Nazis
• Nazi investments
• Administrative measures

Question 19

How did Germany benefit from the employment of ex-Nazis?

Answer 19

Many of the managers and planners who went on to get high positions int he West German gov got their start under Hitler.

Question 20

How did Germany benefit from Nazi investments?

Answer 20

Investments made for 1930s recovery by the Nazis in communications, chemical and electrical engineering and vehicle infrastructure. This infrastructure survived the war and meant that Germany could produce quality goods.

Question 21

How did the West German economy benefit from Albert Speers administrative measures from his war economy in 1942-5?

Answer 21

• The four year plan had improved sectors such as steel.
• He also increased Germany’s industrial capacity.

Question 22

How did existing German strengths contribute to the economic recovery?

Answer 22

• labour resources
• consumer demand
• military spending
• Rhineland area

Question 23

How did labour resources contribute to the economic miracle?

Answer 23

The FRG had plentiful resources; millions of refugees ‘escaping’ the soviet area fled to the West, alongside trained professionals who would not have benefited under the communist system.

Question 24

How did consumer demand contribute to the ‘economic miracle’?

Answer 24

Demand, both home and abroad, was high, as goods had not been as available during the war years, and reconstruction was occurring. Production was starting from a low level anyway.

Question 25

How did military spending contribute to the ‘economic miracle’?

Answer 25

As Germany had demilitarised after 1945 and barred from military spending, they did not have this drain on their economy. Britain, by comparison, spent about 7% a year on military spending.

Question 26

How did the Rhineland area contribute to the economic miracle?

Answer 26

West Germany had inherited it and it was industrially strong, helping make Germany the 2nd largest economy before 1939.

Question 27

What foreign input helped the German economic recovery?

Answer 27

• Currency reform 1948 and the Marshall plan funds of (1.5 billion from 1948-52) which helped the FRG buy essential equipment and expand heavy industry.
• 1950 Korean war brought sharp rise in demand for German exports, and Germany had the capacity to satisfy this demand.

Question 28

employment went from?

Answer 28

13.8 million to 19.8 million