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GERMANY > FRG ECONOMY > Flashcards

FRG ECONOMY Flashcards

1
Q

What type of economy was the FRG?

A

A Social Market economy

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2
Q

Who was appointed to administer Economic development?

A

Ludwig Erhard was appointed director of economic administration under Allied rule in March 1948. He was then economics minister under the FRG between 1949 and 1963.

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3
Q

How did the Allies try to prevent Germany from starting another War?

A

War-related industries were banned or their outputs were restricted, eg munitions and chemicals industries respectively

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4
Q

How did the French and Soviets hold back the FRG’s economic recovery 1945-9?

A

They took reparations in equipment and machinery from each zone of occupation- The French and Soviets dismantled remaining factories for reparations undermining any chance at economic recovery

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5
Q

What was the Reichsmark like 1945-9?

A

Virtually worthless

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6
Q

What was each allied zone of Germany ran by?

A

a military high command; each governed very differently

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7
Q

How many German prisoners of war chose to remain in France?

A

160,000

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8
Q

How much aid did the FRG receive under Marshall plan from 1948-52?

A

$1.4 billion

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9
Q

What evidence is there that the Black market thrived in post war Germany?

A

1kg of sugar in 1947 had its price fixed at 1RM, buy it could only be obtained on the black market where it cost 120-180RM

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10
Q

What was the new currency implemented? When?

A

The Deutschmark was created to administer economic aid; it was announced in June 1948

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11
Q

What was the effect of creating the DM?

A

-It helped to stabilise the economy and break up the black market
-It also meant that real wages were worth something and boosted the economy by encouraging consumerism

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12
Q

Other than the created of the DM, what else occurred in June 1948? What was the effect of this?

A

All but the most essential rationing (milk powder and bread) , and price controls were abolished.

This along with the new currency saw the rise of consumer goods available in shops. People stopped hoarding goods and began selling them + People’s confidence in the economy rose and they became more concerned with the price and quality of goods, hence increasing competition in the market

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13
Q

What was passed in 1952? What did it do?

A

The equalisation of Burdens act- this enforced a tax on peoples assets

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14
Q

What evidence of improvement is there in the economy from 1950 to 1959?

A

-car production was 4x greater
-steel production doubled

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15
Q

What was unemployment at in 1955?

A

1 million, and continued to fall

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16
Q

Who opposed Erhard’s initial reforms? Why?

A

-Britain, labour union leaders, and members of the Bundestag were concerned with E’s policy of converting a command economy into a social market economy; they feared it would lead to the exploitation of workers by business workers (USA supported E’s vision)

-Industrialists called for a return to the pre-command economy with cartels and price fixing. Instead, E wanted to encourage competition between industries, the cartels broken up and price fixing abandoned

-Socialists opposed the abandonment of price fixing. They wanted to nationalise industries and use state control, instead of allowing a capitalist market to set its own levels

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17
Q

What did exports increase from following E’s initial policies?

A

1950- 8,383 million marks
1970-125,300 million marks

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18
Q

What did unemployment fall to following E’s initial policies

A

1950-8.1% unemployed
1965-0.5% unemployed

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19
Q

What did Volkswagen sales average in the 1960’s?

A

400,000 a year

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20
Q

What did cumulative aid from Marshall plan and other aid programmes total?

A

$2 billion through October 1954

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21
Q

How did Marshall aid help the economic miracle?

A

It provided a stimulus to the German economy and an important boost in morale to the emerging state.

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22
Q

What fact elucidates limitations to the Marshall plan in causing the economic miracle?

A

Even in 1948 and 1949, when aid was at its peak, Marshall plan aid was less than 5% of West German national income

23
Q

When was the economic miracle?

A

1948-60

24
Q

When was the Korean War?

A

1950-53

25
Q

How did the Korean War precipitate economic growth?

A

Although the FRG was banned from producing war supplies for the Korean War, the FRG’s industrial goods (eg chemicals, steels, electrical goods) were in higher demand

26
Q

When was the FRG allowed to re-arm?

A

When it joined NATO in 1955; it was permitted to start producing war materials

27
Q

Why was there new investment in the FRG in the 1950’s?

A

-Many businesses had recovered by the mid-1950’s and were able to invest in new, more efficient equipment and factories
-They produced high-quality goods which were sold at low prices. The reputation of German goods improved and exports grew, which led to greater investment, the need for more workers and a higher demand for raw materials

28
Q

How many cars was the FRG exporting to the UK in the 1960’s?

A

16,000 cars per year

29
Q

How many workers came to the FRG from the GDR? How did this help economically?

A

During the 1950’s approximately 2.6 million workers came to the FRG from the GDR; many were skilled and highly educated. The gov thus were able to save money on education and training costs, and could use it elsewhere

30
Q

What was there an influx of after the war?

A

Refugees

31
Q

How did the influx of refugees constitute economic prosperity?

A

Influx of refugees meant that there was a large pool of workers for businesses to draw on. This provided an efficient workforce.

32
Q

How much did social welfare spending increase by?

A

46.7 million DM in 1965
115.9 million DM in 1970

33
Q

What happened to economic growth after 1966?

A

Economic growth slowed- The FRG government accepted the need to intervene in the economy with the Bundesbank managing the country’s money supply and a new system of federal and regional budgeting

34
Q

What happened during the recession 1966-67?

A

-Trade reduced and unemployment increased

-Number of GW’s decreased from 1.3 million at the start of 1966 to 991,000 by the end of 1967

-industrial productivity fell

-Due to social welfare policies, public spending spiralled out of control

35
Q

How did Karl Schiller respond to the recession?

A

-Government planning, intervention & control was increased (eg coal and agricultural industries received subsidies)

-Cartels introduced to stop prices rising

-1967 Economic stabilisation law

-1968 provision added to basic law

36
Q

What was the 1967 Economic stabilisation law?

A

It allowed gov intervention in time of economic crisis to limit regional spending and introduced 5 year plan system for all spending

37
Q

what was the 1968 provision added to basic law?

A

Increased gov control over the budgets of the lander; struggling regional governments would be provided with more welfare

38
Q

What triggered the oil crises of 1973 and 1978?

A

The Fourth Arab-Israeli war broke out in October 1973 and OPEC put oil prices up drastically

39
Q

How much did oil prices increase by following the breakout of the fourth Arab Israeli war?

A

1972- 140 million tonnes of oil cost 10.8 billion DM
1973- 140 million tonnes of oil cost 32.8 billion DM
1978- 140 million tonnes of oil cost 49 billion DM

40
Q

Were Germanys exports affected by economic crises in the 1960’s and 70’s?

A

Not to a significant extent- export figures stayed healthy thanks to a continued demand for German products abroad

41
Q

What measures were introduces to reduce oil spending in Germany?

A

-Car free Sunday’s
-propaganda messages encouraging people to use energy saving tactics at home
-rising investment in atomic power
-KEY; the gov didn’t subsidise oil prices, instead allowing them to rise and fall

42
Q

What economic policy in 1975 was an attempt to overcome economic crises?

A

-Public spending was cut
-income tax was raised

43
Q

How was unemployment controlled in the 1970’s?

A

1973- put a temporary ban on hiring GW’s and banned permits for families of workers already in the country

44
Q

What happened to the economy in the 1980’s?

A

-growth in the economy shrank and prices began to rise with inflation
-Unemployment hit 1.7 million (highest since 1950); initially this drove up amount of public spending on unemployment benefits

45
Q

What did the 1981 government under Chancellor Schmidt do?

A

cut public spending (including benefits and housing allowance); people began to call for a return to a social Market economy with an increased focus on providing welfare

46
Q

What economic policy occurred under Kohls government?

A
  • determined to boost the economy by cutting public spending more fiercely; further cuts to public spending
    including maternity benefits & public holidays

-Retirement age reduced to 58, urging people to take early retirement to increase employment opportunities

-Sold shares in state-run industries such as VW and Lufthansa

47
Q

Were the economic policies of the 1980’s a success?

A

Yes, by 1989 unemployment was at its lowest and economic growth had risen

48
Q

When did the FRG join The IMF?

A

1952; The IMF oversaw the stability of international currencies

49
Q

How did joining the EEC improve German exports?

A

1958-69 FRG exports and imports to and from other EEC countries doubled

50
Q

What was the impact of WW2 on living standards?

A

-1/5 of all housing destroyed
-1/3 of housing that stood was damaged
-influx of refugees led to greater pressure on availability of housing

51
Q

How did the FRG Gov raise living standards?

A

-rents were frozen
-ministry of housing established to oversee building
-Building industry given tax concessions to encourage building
-Housing associations were set up to build homes (both state-ran and private)

52
Q

Describe homes in 1963

A

-63% had a fridge
-42% had a TV
indicative of rising living standards and consumerism

53
Q

How many homes were built?

A

1949; 222,000
1971; 553,000

54
Q

What evidence is there of social inequality deepening?

A

in the 1960’s 1% of households owned 35% of wealth in the FRG

GERMANY (15 decks)

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