FRG Economy

Question 1

What kind of industries were banned when allies took control of Germany?

Answer 1

Munitions were banned, and other war related industries like chemical manufacturing.

Question 2

Which countries wanted to undermine economic recovery

Answer 2

USSR and France, who dismantled the remaining factories for reparations in chance of undermining any chance of an economic recovery

Question 3

What was the reichsmaek worth?

Answer 3

Nothing - this damaged the economy as the back market thrived

Question 4

Due to economic problems did people leave or stay?

Answer 4

160 000 prisoners of war stayed in France rather than return, but there was an influx of around 10 million refugees into Germany, after they were expelled from east Europe or deserted the soviet army, however they were to become essential in transforming Germans economy

Question 5

What did Marshall aid do to help west Germany?

Answer 5

1.4 million dollars was given to the western zones, which set off the creation of the Deutschmark to administer the aid. It helped stabilise the economy and break up the black markets as currency was backed by western powers

Question 6

What were the main economic policies of erhard?

Answer 6

Was director of the economic administration in march 1948 and worked to create a social market, or free market economy. He worked to create one from 1949 - 1963. On June 1948 he announced the replacement of the RM with the DM. On 24th of June he also abolished all, but the most essential rationing: such as bread, milk powder and price control

Question 7

When did wages stay fixed until?

Answer 7

November 1948 - to allow businesses to establish themselves

Question 8

What did the combination of a new currency and all the other things of erhard mean?

Answer 8

Stuff like cakes, vegetables, butter and eggs were for sale In shops as well as non food items like stoves and stuff. People stopped hoarding and started selling. Additionally rather than buying anything that became available, people shopped with more care as they were confident that supplies would be less erratic

Question 9

Did erhards reforms bring immediate economic recovery?

Answer 9

No - economic recovery was not immediate. Factories and businesses could produce and trade again, but machinery had to be replaced and train workers. Unemployment rose from 400 000 in June 1948 to 900 000 in January 1949. And by 1950 it was as high as 1.8m. However after it started to decline and production of some industries increased. For example in 1959, car production was 4.5x greater than 1950. In the same time span, steel production doubled.

Question 10

What did erhard receive opposition for and by whom?

Answer 10

Economic council and then Bundestag criticised him for his policy of converting command economy to free market economy. Britain also opposed the idea who feared that it would lead to exploitation of workers by business owners, however USA supported him

Question 11

What economy did people want

Answer 11

The pre command economy which featured cartels and price fixing. However erhard wanted cartels broken up and price fixing abolished to allow competition within industries. Socialists opposed this, not because of price fixing, but the fact that they wanted nationalisation of industry not industries to set their own prices

Question 12

With support from the Bundestag erhard could continue his policies:

Answer 12

Allowing business tax concessions, removed wage restrictions, encouraged the setting up of trade unions to ensure that workers had adequate representation in wage negotiation. 1951 there was a policy of co determination which allowed workers’ representatives on managerial boards in industry

Question 13

When was the economic boom/miracle

Answer 13

1955 - 1966

Question 14

How did the Korean War contribute to economic miracle?

Answer 14

1950 - war in Korea sparked a need for war supplies. FRG was banned from producing these, but it’s industrial goods, chemicals, steel and electrical goods were now in greater demand where other countries, such as USA, had shifted to war production. In 1955, FRG joined NATO, which allowed them to re arm and start producing war materials due to the war

Question 15

How did new investment contribute towards the economic miracle?

Answer 15

Due to the recovery of many businesses in the mid 1950s, they could invest in new and more efficient equipment. Even new factories. They could then concentrate on producing high quality goods and keeping prices low as possible to compete. Reputation of German goods increased and so did exports. As exports grew, so did businesses, which could then employ more workers and invest more. Mandem who produce consumer goods could also buy raw materials

Question 16

How did workers contribute to the economic boom?

Answer 16

Influx of refugees meant that there was a large pool of guest workers for the businesses to draw on. At first they needed training, but after this was overcome, they provided an efficient workforce. And the fact that there was many workers kept wages low

Question 17

During the 1950s, how many workers came into the FRG from the GDR?

Answer 17

3.6 more million workers came into the FRG from the GDR. Many young, skilled and highly educated and all actively seeking work and wanting to become a part of west Germany consumer culture, thereby helping the economy twice over

Question 18

Why did erhard not like the term economic miracle

Answer 18

He liked to see it as a result of good economic planning and hard work from the German population

Question 19

What problems was there for the economy?

Answer 19

There were possible problems, however. Growth could not keep going at the rapid rate of the 1950s and early 1960s. Once everyone had bought their consumer goods for the first time, demand fell to a lower level as people replaced these goods at different times. The Berlin Wall, put up in August 1961 by the GDR to cut it off from the FRG, stopped workers crossing from the GDR into the FDR and reduced the ‘free’ professionals that had helped the expanding economy.

Question 20

How much was spent on social welfare in 1965 compared to 1970?

Answer 20

DM46.7 millions -> DM115.9 MILLION

Question 21

During the first oil crisis, what did the chancellor Schmidt do?

Answer 21

Worked hard to persuade other world leaders not to introduce protective tariffs to limit world trade during the first oil crisis of 1973. Additionally german exports remained healthy due to demand

Question 22

Features of the economic recession of 1966-67

Answer 22

Domestic and international trade decreased and unemployment rose. Guest workers would be vital for economic recovery. 1966 there were 1.3m, by 1967 there were 990 000. Productivity fell and due to welfare policies, public spending spiralled out of control.

Question 23

What did Mandem do to help the recession

Answer 23

Chancellor erhard and economics minister Karl Schiller reorganised the governments approach to economy. He increased government planning, intervention and control. E.g. there were subsidies for agriculture and the coal industry. He also reintroduced cartels to fix prices. 1967 the economic stabilisation law allowed for government intervention in times of economic crisis to limit regional spending and introduced a 5 year plaAm system for all government spending

Question 24

What was added to the basic law in 1968?

Answer 24

A provision added to the basic law that allows money to be moved around länder, from the more wealthier ones to the poorer ones to help fund social welfare, however these policies were seen as failures and chiller was replaced by Schmidt in 1972 just in time for the next crisis

Question 25

What was the role of oil in the FRG

Answer 25

Throughout the 60s and 70s, FRG became hella reliant on oil rather than coal as a source of fuel. As well as that, car ownership increased demand for fuel. Middle easter oil rich countries profited and were still able to sell it at a reasonable price since they had so much. The FRG spent around DM10.8m on 140m tonnes of oil

Question 26

What triggered the oil crisis

Answer 26

1973 October - the fourth Arab Israeli war broke out and OPEC put up prices very sharply in 1973 and again in 1978. 40% of the FRG’s oil was through OPEC. 140m tonnes was worth DM32.8 billion and 49 in 1978: contributing to an economic crisis and hit the FRG from years 1974 - 75. Unemployment rose sharply and was accentuated by the fact that baby boomers were reaching the age of employment as well. Forgeim workers had their contracts terminated and a ban was placed on hiring them. This helped prevent the crisis from worsening

Question 27

Was the FRG hit badly compared to other countries?

Answer 27

No - it was helped by its export income and due to this the economy recovered rapidly. Oil consumption dropped due to governmental measure such as no car Sunday and introduced autobahn speed limits. Government propaganda to reduce energy usage and more investment into atomic power to reduce reliance on oil. They also didn’t susbisidse oil costs and them rise in line with the actual costs, making it expensive and encouraging cut backs. Germany converted to new fuels more rapidly than others

Question 28

What are some challenges of the 80s?

Answer 28

Growing gap between the rich and poor resulting in increased hostility towards guest workers. German exports continued to rise however they never reached the heights of the 1960s and real growth in the economy shrank as prices began to rise with inflation. Unemployment was 1.7m in ‘81 which increased social welfare spending and resulted in many cuts in 1981

Question 29

What did the government do in 1982?

Answer 29

They took over and cut spending heavily. They said welfare just created dependency and not independency and chancellor Kohl said that productivity levels were falling due to this dependency and slack values of the baby boomers. Public holidays were also cut and reduced retirement age to 58 to urge early retirement. These brought slight improvements. By 1989 employment was at its lowest and economic growth had risen. Berlin Wall fell and 7nificstionnwas isowlwla

Question 30

What was integration into the European economy?

Answer 30

From the creation of the FRG, Adenauer wanted to establish closer ties with Europe and to be accepted as a part of Europe. He saw it as vital for economic and political success and wanted to build a close working relationship with France. He also wanted to trade with Europe rather than unification

Question 31

How did living standards change after 1945?

Answer 31

They underwent huge change from ‘45-‘89. War damage caused many people to be homeless and caused families,to be torn apart. 1/5 of all housing was binned flat and 1/3 still standing was damaged. Refugee influx also put pressure on housing. Housing and food was the most, pressing issues of the Kate 1940s

Question 32

What was,done tho help,the housing situation

Answer 32

Ministry of housing set to to oversee rebuilding. Rents frozen and building industry was given subsidies to build. Housing associations set up to build homes

Question 33

What happened to living standards as economy improved.

Answer 33

They improved. By 1963 - 63% of homes had fridge, 42% had tv, 36% had washing machine. These percentages in 1985 rose to 82%, 82%, 87%. Real wages often exceeded prices.

Question 34

By the 1980s how many people were covered by benefits and healthcare

Answer 34

90%

Question 35

What did the pension reforms in 1980s mean?

Answer 35

Most people received a state pension.

Question 36

How many years longer did people live for in the 1980s compared to the 1950s

Answer 36

12

Question 37

However what was social inequality like.

Answer 37

It deepened. At the economies best in 1960 35% of households were owned by the top 1%, then to 78% in 1973 compared to 45% in ‘88