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economy in FRG Flashcards

1
Q

what was the economy like in 1945?

A

devastated by war, physical infrastructure destroyed, homelessness huge, worthless currency

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2
Q

what economic challenges did the FRG still face in 1949 despite Allied economic reforms?

A

rising unemployment + prices, need to rebuild housing, integration of Germans expelled from Eastern Europe

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3
Q

what was FRG industrial output in 1947?

A

33% of its 1938 level

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4
Q

what reforms took place in 1948 that helped the economy?

A

currency reform, ending of price controls, Marshall aid

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5
Q

what was Marshall aid?

A

US monetary aid that helped stimulate economy and funded improvements to infrastructure + industrial development

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6
Q

what signs where there in 1950 that the economy was slowing down?

A

unemployment rose to over 2 million, inflation rising

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7
Q

what did currency reform bring back to the economy?

A

confidence in the economy

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8
Q

How did the Nazi period actually help FRG economic recovery?

A

wealthiest European economy during that period, many industrial plants unaffected by war so country had potential for growth and production

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9
Q

what did people increasingly resort to when the currency was worthless?

A

bartering for goods

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10
Q

what happened to food and calories because of the bad economy?

A

food rationed, people on less than 1,500 calories per day

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11
Q

what did the industrial production in Bizonia rise from between Jan-Dec 1948?

A

51% of 1936 levels to 75%

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12
Q

what was economy recovery due to according to historians?

A

currency + tax reform + free market forces, marshall aid important but less so

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13
Q

when was the new Deutschmark introduced?

A

20th June 1948

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14
Q

why did the Deutschmark have a negative effect on creditors and savers?

A

assets were changed at less generous rates, savings reduced e.g from RM100 to DM6.5

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15
Q

why were large deposits of Deutschmarks given to banks?

A

used to loan to businesses to develop production, stimulate economy

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16
Q

how does industrial output increasing by 50% show successes of currency reform?

A

people more willing to invest in strong currency, producing goods easier with loans from banks

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17
Q

what did Erhard do on 20th June 1948?

A

abolish price controls and relaxed rationing

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18
Q

what happened as a result of the abolition of price controls (success)?

A

prices found own levels, gave producers more incentive to produce, goods returned to markets, competition

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19
Q

why did it not matter that prices rose after the abolition of price controls?

A

people had money to spend that was worth something, they would be more willing to buy, greater demand greater production, stimulate economy

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20
Q

what happened to the black market after currency and price control reform?

A

disappeared, goods present in shops

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21
Q

what did the tax rate fall to in 1950 for those on incomes of DM2,400? what was the rate in 1948?

A

18%
as high as 85% (on Reichsmarks)

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22
Q

how did tax reforms stimulate the economy?

A

ordinary working people had more money to spend, stimulated demand, stimulated supply, helped economy find its momentum

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23
Q

what was the change in absenteeism after initial FRG reforms?

A

down from 9.5 hours per week to less than 2 hours

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24
Q

why did absenteeism reduce?

A

people didn’t have to spend time queuing, bartering and finding food

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25
Q

what did less absenteeism mean for the economy?

A

more productivity, index of industrial production rose

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26
Q

what was the growth of industrial production in 1950?

A

25%

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27
Q

what was the rate of unemployment in 1950 and 1960?

A

1950-10.3%
1960-1.2%

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28
Q

what did salaries rise by between 1949 to 1955?

A

80%

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29
Q

when was the economic miracle in the FRG?

A

1955-66

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30
Q

what was the social market economy?

A

middle way between completely free and unregulated marked and state controlled socialist economy

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31
Q

how did the state monitor the economy?

A

ensured fair competition, intervened to protect vulnerable members through social welfare

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32
Q

what criteria shows the extent of economic recovery?

A

reduction in unemployment, amount of income saved, standard of living, production rates, absenteeism, trade

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33
Q

what was the FRG economy characterised by in the 50s?

A

declining unemployment, rising exports, rising real incomes, growing consumer confidence and demands for goods, growing investment, new industrial centres, growing profits

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34
Q

what did government work creation schemes to do help the economy?

A

tackle initial problem of unemployment

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35
Q

what was the Investment Aid Law of 1952?

A

provided gov subsidy of DM3.2 million to facilitate industrial investment

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36
Q

what did the gov rebuilding programme do?

A

dealt with destruction of WW2, increase industry and production

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37
Q

what other measures did the government take to initially grow the German economy?

A

reduced protective tariffs, laws to prevent economic monopolies (Anti Trust Law1957), strong banking controls

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38
Q

what was the Anti Trust Law of 1957?

A

law to prevent development of economic monopolies, designed to prevent and dismantle cartels

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39
Q

what other factors contributed to economic growth?

A

growing world economy, limited defence spending, economic foundations, Korean War, foreign policy, Marshall plan, codetermination

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40
Q

what did the growing world economy increase in Germany?

A

exports, in higher demand

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41
Q

why was limited defence spending beneficial for the FRG?

A

not hampered with spending on rearmament, more finances available for investment in economy

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42
Q

what economic foundations did Germany have that helped the economy?

A

sea ports, abundance of raw materials, educated and skilled workforce

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43
Q

how did the Korean War 1950-53 help the German economy?

A

rise in demand for German exports, boosted industrial production and created more jobs

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44
Q

what did the country’s economic cooperation help it do?

A

increase trade, expand export markets, increase investment and confidence in economy

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45
Q

how much money was given by the Marshall plan 1948-52, what was this used for?

A

1.5 billion, bought equipment to rebuild and modernise industry

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46
Q

what was co-determination?

A

allowed workers to elect representatives to participate in management of business, led to good working relationship between management and workers

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47
Q

what was the FRG economy like worldwide by 1960?

A

3rd largest

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48
Q

why did trade become a priority in the economy?

A

german industrial goods had reputation for quality and value so exports rose and prioritised

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49
Q

why were investors more willing to invest in the economy?

A

confidence had grown, tax concessions, wanted to create new designs and products

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50
Q

why did industrialists oppose the social market economy?

A

wanted pre-command economy back with cartels + price fixing

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51
Q

what kind of economy did the Economic council and Bundestag want + why?

A

pre-command economy, worried workers could be exploited

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52
Q

why did socialists oppose the social market economy?

A

opposed not having fixed prices, wanted nationalised industries and state control

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53
Q

how did Erhard overcome opposition to the social market economy?

A

codetermination for workers, economy had elements all could support

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54
Q

how many refugees were there in Germany in 1945?

A

10 million

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55
Q

what role did Erhard occupy 1949-63?

A

minister of economics

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56
Q

what was the average economic growth rate of the FRG between 1955 to 1966?

A

8%

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57
Q

by mid-1950s Germany was the _ largest trading power in the world?

A

3rd

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58
Q

what did FRG share of world trade grow from between 1965 and 1975?

A

6.6% to 7.9%

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59
Q

what was unemployment at in 1955?

A

1 million

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60
Q

what had been achieved by the 1960s regarding employment?

A

full employment

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61
Q

why was full employment so remarkable?

A

found not only jobs for its original population but also for the 2 million east Germans who fled from the GDR and other refugees

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62
Q

how much of coal and iron production did the gov own or control by the 50s?

A

40%

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63
Q

why can year zero not be applied to the economy?

A

infrastructure and technical know how remained providing perfect conditions for economic miracle

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64
Q

what is an economic miracle?

A

period of dramatic economic development that is entirely unexpected and shocking/unexpectedly strong

65
Q

what did the number of exports rise from and to in a 20 year period?

A

8363 to 125300

66
Q

why did consumerism increase during the economic miracle?

A

real wages increased, people had more money to spend, brought consumer goods like radios, tvs etc

67
Q

what were Volkswagens average sales yearly in the 60s?

A

400,000

68
Q

what did the central bank created in 1957 do?

A

monitor and control interest rates and inflation

69
Q

what did joining NATO in 1955 allow the FRG to do?

A

rearm and produce war materials, increased exports and trade further

70
Q

why did demand for goods fall?

A

after people initially brought things, only brought when needed, no influx of need

71
Q

what happened in the mid 60s, bad for economy?

A

recession hit and growth slowed

72
Q

what was the biggest effect of the recession?

A

psychological effects, complete loss of confidence in economy

73
Q

what happened to unemployment rates during the recession?

A

rose to 3.2% 1966 but 0.8% in 1968

74
Q

how did the government work together to mitigate the effects of the recession?

A

Grand Coalition, parties worked together to come up with solutions

75
Q

when was the economic recession?

A

1965-69

76
Q

what factors led to the recession?

A

slowing growth rates, wages growing faster than productivity threatened price stability + risked inflation

77
Q

how much had prices risen by by 1966?

A

4%

78
Q

what gov measures influenced the recession?

A

increased gov spending + gov budget doubled

79
Q

what was Erhard criticised for spending too much on?

A

modernising railway infrastructure, Us military hardware (rearmament), agricultural subsidies

80
Q

what did Erhard cut his spending plans by during the recession?

A

10%

81
Q

what rates did Erhard raise during the recession?

A

interest rates

82
Q

what was the main problem with the recession for Germany, how was this affected by global economic downturn?

A

to pay for increased spending + greater wage demands needed to raise productivity and sell even more abroad but all economy’s suffering, demand less and less money to buy goods

83
Q

why did Erhard resign as chancellor in 1966?

A

US refused to reduce FRG financial contributions to US forces and bases in FRG, disagreement in his FDP + CDU?CSU coalition - FDP wanted spending cuts, CDU raise taxes

84
Q

when was Erhard chancellor?

A

1963-66

85
Q

who replaced Erhard as chancellor?

A

Kurt Kiesinger

86
Q

who was the new economics minister under Kiesinger?

A

Karl Schiller

87
Q

what did Schiller believe should be done in the economy?

A

more gov intervention to counter limitations of free market

88
Q

what did Schiller introduce in Dec 1967?

A

five year financial plans + attempted to coordinate budgets of different levels of gov

89
Q

what was the Stabilisation Law, when was it introduced?

A

June 1967, process of cooperation in times of economic difficulties, increased federal gov activity in economy by altering taxes + raising loans

90
Q

why was Article 109 of the Basic Law amended?

A

to allow increased gov control of tax and spending policies

91
Q

why were moves made to improve coordination, what did Kiesinger’s gov want to expand?

A

higher education opportunities, improving health facilities, further develop infrastructure

92
Q

who was cooperation encouraged between?

A

workers, employees and the state

93
Q

what happened to public spending and taxes during the recession, what change was there to VAT?

A

spending reduced, taxes raised, VAT from 10% to 12%

94
Q

what statistics showed the measures to end the recession seemed successful?
(unemployment, growth, inflation)

A

by 1968 unemployment falling, industrial growth at 6% per year,
1969 inflation fallen to 1.5%

95
Q

who became the chancellor after Kiesinger in 1969?

A

Willy Brandt

96
Q

what was Brandt’s 1st economic action?

A

revalued DM by almost 9.3%

97
Q

what did the revaluing of the DM mean for exports, why did this not matter?

A

exports more expensive, quality and reputation continued tho so customers prepared to pay extra

98
Q

what was the shift in priorities under Brandt?

A

shift from social market economy to pursuit of social welfare

99
Q

how much did Brandt increase spending on welfare by?

A

25% to 33%

100
Q

what did increased gov spending under Brandt fuel?

A

inflation

101
Q

when did Schiller resign, who replaced him?

A

June 1972, Helmut Schmidt as minister of finance and economics

102
Q

what happened to expenditure on education under Brandt?

A

increased by 300%

103
Q

what did the Education Support law do?

A

made more grants available to poorer students

104
Q

when was the school leaving age raised to?

A

16

105
Q

what were pensions for those wounded in the war raised by?

A

5%

106
Q

what happened to pensions for widows of soldiers?

A

raised by 16%

107
Q

what was given to full time carers?

A

state pensions

108
Q

what happened to health insurance

A

extended to different groups

109
Q

what did the social housing budget increase by?

A

36%

110
Q

when was the first OPEC oil crisis?

A

1973

111
Q

what was the result of the crisis (imports, balance of payments)?

A

had to pay DM17 billion more for imports, balance of payments from surplus to $692 million deficit in 1 year

112
Q

what happened to unemployment between 1973 to 1975?

A

from 1.2% to 4.7%

113
Q

what were the 3 main interlinking problems of the 1973 oil crisis/

A

rising public expenditure because of unemployment, falling revenues from taxes from unemployment, rising rates of taxation for those still in work

114
Q

what gov initiatives were introduced to deal with the oil crisis?

A

car free Sundays- save on fuel, ban on recruitment of migrant workers,

115
Q

how did exports help the economy deal with the 1973 oil crisis?

A

continued to stay high, kept money coming into the economy and stimulating some growth

116
Q

why was a switch to nuclear energy a good gov measure?

A

meant energy and fuel supply no longer dependant on foreign political issues

117
Q

what would the European monetary system do?

A

make all currencies of EEC member states be tied together so they operate together in one economic bloc

118
Q

how did the gov support private sector investment during the 1973 crisis?

A

DM 7/8 billion in grants, public works contracts to create jobs

119
Q

what did the gov allow back during the 1973 crisis?

A

cartels and mergers, abolished legislation that regulated them, allowed for more competitive markets and more efficient production

120
Q

what did OPEC do that caused the 1973 oil crisis?

A

announced 70% increase in price of oil and 5% decrease in output

121
Q

what principles did Kohl support?

A

principles of social market economy

122
Q

what did growth rates average at in the 80s?

A

3.6%

123
Q

what had unemployment fallen to by 1989?

A

7.6%

124
Q

what had inflation fallen to by 1986?

A

less than 1%

125
Q

what did Kohls government do to public spending, taxes and gov budget?

A

public spending reduced, tax cuts, kept budget increases to max 3%

126
Q

what was met with opposition in the 80s?

A

efforts at privatisation, remained committed to social market economy

127
Q

what happened to exports under Kohl, statistic?

A

rose significantly, favourable balance of payments surplus

DM 73.4 billion - 1985
DM 134 billion - 1989

128
Q

when was the second oil crisis?

A

1978

129
Q

what was the key gov measure that helped the FRG economy deal with the oil crises better than other countries?

A

gov didn’t subsidise fuel costs, let prices rise, incentive for people to use less fuel, economy and people less impacted with the cost

130
Q

what happened to the gap between rich and poor in the 80s?

A

increased

131
Q

what was the balance of payments 1950, 55 and 60?

A

-3
1.2
5.2

132
Q

how did the price of a barrel of fuel change?

A

$3 to $12

133
Q

why was there a refugee crisis in the FRG?

A

kicked out of Nazi occupied territory, fled new Soviet countries, from extermination + labour camps

134
Q

what did Adenauer accept international control over in 1949, what did it show?

A

control over Ruhr, showed German willingness no to revert to militarism or aggression

135
Q

when was the ECSC created?

A

by Treaty of Paris 1951

136
Q

why was the EEC created?

A

to facilitate economic prosperity between member states and move towards greater European integration

137
Q

what does ECSC stand for?

A

European Coal and Steel Community

138
Q

what were the motives of the ECSC?

A

place key areas of German industry under international supervision, help Europe recover, merge industries so they plan and develop together by sharing ideas and trading freely

139
Q

what countries joined the ECSC?

A

france, FRG, belgium, luxembourg and netherlands

140
Q

how was the ECSC successful?

A

improved french german relations, provided route to closer cooperation

141
Q

how did trade and welfare improve under the ECSC?

A

trade in coal increased 10x
welfare- provided more than 112,500 apartments for workers

142
Q

when was the EEC created, what was it a development of?

A

1957 by Treaty of Rome, development of ECSC

143
Q

what was the initial purpose of the EEC?

A

free trade zone with common economic policies and possible goal of political union

144
Q

what 2 countries dominated the EEC?

A

france and FRG

145
Q

in what 3 ways was the FRG the leader of the EEC by the 80s?

A

clear knowledge of how it wanted EEC to develop, honest broker in disputes - willing to pay more + make compromises to reach agreement, supported interests of smaller member countries

146
Q

how much of the EEC budget did the FRG pay?

A

sometimes as much as 25%, paid largest share

147
Q

what percent of the GDP of the EEC did the FRG have?

A

25%

148
Q

why did the FRG support developmental aid to less developed countries under the EEC?

A

gave countries free access to EEC markets but also gave FRG increased markets for its exports

149
Q

what did the European money system do, what would the effect be?

A

fix exchange rates within EEC, keep inflation down over Europe

150
Q

how did the living standard change in the FRG?

A

drastically, from bombed buildings and shortages of all goods to a country of affluence and plenty

151
Q

how did car ownership rise?

A

1950- 2 million
1965- 12.1 million

152
Q

what was there more than 95% ownership of by the 80s?

A

washing machines, fridges, tvs, telephones and at least bi-annual holidays

153
Q

how did living space per person rise?

A

1950- 19 square metres
1980- 30 square metres

154
Q

what happened to home ownership, statistic?

A

remained low, most preferred to rent, 37.8% of people owned in 1987

155
Q

what was the improved standard of living fuelled by?

A

low cost of living caused by low inflation and restraint in wage demands

156
Q

what did prices rise by annually in the 70s?

A

6%

157
Q

what was the price rise in the UK in 1975?

A

24%

158
Q

when did the FRG join NATO?

A

9th May 1955

159
Q

how were reparations for the FRG different to those of Weimar?

A

taken in equipment and machinery rather than money

germany (12 decks)

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