Economic recovery, 1945-55

Question 1

ww2

Answer 1

WW2 did not end with armistice and people believing Germany won

Question 2

7 july - 12 august 1945

Answer 2

Potsdam Conference. Allies decide what would happen
◦ Agreed it was important to rebuild economy but also that Germany could not start another war
▪ War industries banned and others war-related (eg. chemical) were restricted
▪ Reparations to be taken in equipment and machinery from each zone
▪ Bombing; many places did not have

Question 3

Reichsmark

Answer 3

black market thrived; 1kg of sugar was RM 120-180, but RM1 on black market
◦ Hard to get workers; wages bought hardly anything
◦ Transportation and communication links crossed zones, hampering economic recovery

Question 4

allied control council

Answer 4

Allied Control Council worked together to overcome difficulties, each zone run by military high command and control varied

Question 5

some germans left

Answer 5

16,000 German prisoners of war in France stayed there
◦ 10M German refugees ahead of soviet army or were expelled from Eastern Europe
▪ Allies forced to deal with refugees and homeless Germans through rationing
▪ Many refugees housed on camps, eg. Dachau (ex concentration camp)
▪ 4.5M soldiers returning home and people from labour camps had to be housed

Question 6

after 1949

Answer 6

Relations deteriorated rapidly as cold war developed

Question 7

Marshall Plan

Answer 7

$1.4M aid given to Western zones under Marshall Plan, 1948
◦ Set off creation of Deutschmark to administer aid
▪ Helped to stabilise economy and break up black market
▪ Soviet zone set up its own currency

Question 8

1949

Answer 8

1949: Divided into FRG and GDR

Question 9

currency reform

Answer 9

◦ Currency reform: every adult given DM60 and could exchange old RM100 or DM6.5; confidence in reform; people
worked, saved and spent; higher factory production

Question 10

Ludwig Erhard

Answer 10

Erhard: director of economic administration in March 1948
◦ Believed in social market economy
◦ Economics minister 1949-63

Question 11

18 June 1948

Answer 11

announced that RM would be replaces by DM on 21 June

Question 12

24 June

Answer 12

economic council gave Erhard power to abolish all but essential rationing

Question 13

wages fixed

Answer 13

Wages fixed until 1948 to allow businesses ot establish themselves

Question 14

purchasing habits

Answer 14

Cakes, vegetables, butter, eggs were now on sale in shops
• People stopped hoarding and started selling
• People started shopping for quality and not for anything that became available
• Currency reform only affected cash and monetary savings

Question 15

tax on assets

Answer 15

Military government wanted tax on all assets, money to be used to compensate those who lost everything
◦ 1952: Bundestag passed Equalisation of Burdens Act
◦ Money raised and redistributed

Question 16

immediate reform?

Answer 16

Reform was not immediate; factories and businesses could start trading and producing again, but needed to replace machinery
and train workers

Question 17

business failure

Answer 17

Some businesses failed; could not afford to pay wages

◦ Others kept going but had to lay off some workers

Question 18

unemployment

Answer 18

June 1948: 442,000; January 1949: 937,000, 1950: 1,800,000, 1955: 1,000,000 and continued to fall

Question 19

car production

Answer 19

production 1959: 4.5x than 1950 and steel production x2

Question 20

opposition to erhard

Answer 20

first in Economic Council, then in Bundestag for wanting to convert command economy to social market
economy
• Britain opposed idea and supported concerned labour
leaders who feared social market economy would lead to
exploitation of workers by business owners
• USA supported social market economy
• Industrialists were not supportive
◦ Many wanted pre-command economy with
cartels and price fixing; Erhard wanted to break
up cartels

• Socialists wanted to nationalise industries and use state
control

Question 21

safety net

Answer 21

Capitalist market with responsible government provided
safety net for poorest ; Erhard won support in Bundestag
to continue policies, so business tax concessions and
removing wage restrictions while encouraging trade
unions

Question 22

co-determination

Answer 22

1951: policy of co-determination, allowing workers’

representatives on managerial boards in industry