FRG Economy Flashcards
What was the Marshall Plan of 1948?
Economic aid from the USA given to Western Zones worth $1.5 billion dollars between 1948 and 52.
What was the Currency reform of 1948?
The changing of the currency of Germany from the Reichsmark to Deuschmark. This replaced money which was becoming valueless and gave people the confidence to buy, save and not use the black market economy.
What was the social market economy from 1948?
A socioeconomic model combining a free market capitalist economic system along side social policies to establish both fair completion from within the market and a welfare state.
What was wage controls?
Until 1948, it allowed government to impose a cap on the wages given for each industry.
What was the Investment Aid Law of 1951?
This provided government’s subsidies to aid the heavy manufacturing industry.
What was the Equalisastion of Burdens Act of 1952?
This transferred the wealth from the well off to provide to everyone who had lost in the war.
What was the Codetermination Law or 1951?
This permitted workers in iron and steel to have some say in management descions. It was extended to the establishment of Works Councils for joint discussions between workers and employees in 1952. This helped Foster the idea of social partnership between employers and kept wage demands low and strikes down.
What was the July 1952 European Coal and Steel Pact?
This was designed to integrate the coal and steel industries in Western Europe. The original members of the ECSC were France, West Germany, Italy, Belgium, the Netherlands and Luxembourg.
What was the August 1952 International Monetary Fund?
The FRG joined the international monetary fund. This was a fund which helped stabilise the world’s economies.
What was the Anti Trust Law?
This prevented the establishment of monopolies. This created more competition and lead to cheaper goods because companies were competing with one another.
What was the Treaty of Rome 1957?
It set up the EEC which brought together Belgium, Germany, France. Italy, Luxembourg and the Netherlands to work together towards integration and economic growth through trade.
What was the Franco German friendship Treaty, January 1962?
The treaty called for regular consultations between France and West Germany which concerned questions on defence, education and youth issues. It also requires regular summits between high level officials which implies that the Heads of State and Government have to meet at least twice a year and the Ministeres of Foreign Affairs every three months, to encourage collaboration between the 2 states.
What was the Economic Stabalisastiin Law of 1967?
This increased the power of the Federal Goverment to raise loans, alter taxes and build funds for economic investment.
What was 1981 Goverment spending cuts?
Goverment cut public spending including benefits and housing allowance.
What was Post 1982 Goverment Spending Cuts?
Cuts in social welfare spending including maternity benefit. Cut public holidays and reduced retirement age to 58 to urge people to take a early retirement.
What was part privitisastion post 1982?
The goverment sold off shares in state run institutions eg Volkswagen.
What was the Single European act July 1987?
Tired European Economies closer to each other to prepare for a European single currency.
How did the allies prevent Germany from starting another war when the occupied it?
They banned industries which were considered to be war industries kine munitions and others that were war related such as the chemical industries had their out put restricted.
How were reparations taken after the war?
They were to be taken in equipment and machinery from each zone. Due to the level of bombing, some places had very little of either. The French and Soviets dismantled many remaining factories for reparations underming the chance of an economic recovery.
What was the value of the reischsmark like after the war?
It was almost worthless which made the black market thrive.
What shows how bad the economic situation in Germany was in relation to prisoners of war?
160,000 prisoners of war in France decided to stay there instead of coming back to Germany
Why was there a massive amount of refugees in Germany after the second world war?
Ten million Germans came as refugees ahead of the soviet army or were expelled from Eastern Europe under the reallocation of land and people agreed at Potsdam.
How were the refugees from the war dealt with?
Some refugees were found work on farms as part of the rebuilding of Germanys agriculture. The rest needed housing and feeding. Many refugees were houses in camps, some even in Dachu an ex concentration camp.
What added to the influx of people into Germany post war?
The soldiers returning home and people from Nazi labour or concentration camps who had to be housed and fed until they could go home. There were about 4.5 million of them.
Who was appointed director of economic administration in March 1948?
Ludwig Erhard
What economic principle did Erhard believe in?
A social market economy
How long was Erhard economic minister for?
1949 to 1963
When was the currency change announced?
the 18th of June 1948
What powers was Erhard given on the 24th of June 1948 by the economic council?
The power to abolish almost all but the most essential rationing, such as bread and milk powder, and all price controls.
What did Erhard not do until November 1948 and why?
He did not abolish price controls in order to give businesses a chance to reestablish themselves.
What was the result of Erhards monetary reforms?
People stopped hoarding goods and things were now actually for sale in the shops, whilst people now had more of a careful concern for price and quality.
What is a social market economy?
A free market economy with elements of social support for the poorest built in.
What was one of the major factors behind the separation between the FRG and GDR?
The marshall plan
Why did the GDR set up its own currency?
Because they were not involved in the deutschmark, this made separation more likely.
Why did Erhards monetary reforms not bring immediate economic recovery?
The problems were to great.
Why did factories not recover automatically after the war?
Although they could start producing and trading again, they had too replace machinery and train workers.
What were two ways that businesses struggled after the war?
Some businesses failed because they could not pay wages whilst others had to lay off workers
How much did unemployment rise between June 1948 and January 1949?
It went from 442,000 to 937,000
What was unemployment at by 1950?
At 1,800,000
What was unemployment like by 1955?
It was at 1,000,000 and continued to fall
How did car production change from 1959 to 1950?
In 1959 it was 4.5 times greater then in 1950
Who had opposed the introduction of a social market economy?
The economic grand council and Britain
Why had Britain opposed the idea of a social market economy?
They shared the concerns of union workers that feared a social market economy would lead too the exploitation of workers by business owners.
Who had supported the introduction of a social market economy?
The USA
Why did socialist’s oppose a social market economy?
They wanted the government to use price fixing instead of competion.
What policy was passed in 1951?
Co determination
What was co determination?
This allowed for workers representation on the managerial boards in the industry.
What was the period between 1955 to 1966 called?
The economic miracle
How did the Korean war contribute to the economic miracle?
War in Korea sparked the need for war supplies in the 50s. The FRG was band from producing these but its industrial goods: chemicals, steel and electrical goods were now in greater demand as other countries like the USA had shifted to war production. They had also joined NATO
What happened when the Nazis joined NATO?
They were allowed to start producing war materials, mainly as a result of the Korean war
Why did the repuation of German goods and exports grow?
Many businesses had recovered sufficiently by the mid 1950s to be able to invest into new more efficient equipment, even factories. They focused on producing high quality goods and kept their prices low to compete.
Why did the high amount of refugees contribute to the economic miracle?
There was large pool of guest workers for businesses to draw on. At first many of these needed training but once that problem was overcome they provided an efficient workforce, and the fact that there was a large pool of workers kept wages low.
During the 1950s how many workers came from the GDR to the FRG?
3.6 million
Why was the workers from the GDR good for the FRGs economy?
Many of them were young, skilled and highly educated such as doctors and engineers, they were all actively seeking work and wanting to become apart of Western Consumer culture. Many of them were employed under short fixed term contracts so the government saved the money it would have spent training them and could use it elsewhere such as on housing or construction.
What finally became a success for German manufactures in the 50s?
The Volkswagen in the 1960s, sales averaged at 400,000 per year.
How many were unemployed in 1950 vs 1971?
8.1% to 0.7%
In 1966 under the new economics minister Karl Schiller how did the FRGs approach to its economy change?
They began to accept that the government had to interfere with its economy, the Bundesbank managing money supply and a new system of federal and regional budgeting.
How did the spending on social welfare change between 1965 and 1970?
It rose from 46.7 million DM to 115.9 million DM. This was despite various cits to benefits.
What was the economy helped by in the 70s?
Germanys export figures stayed healthy thanks too continued demand and the fact that Schmidt worked hard to persuade other world leaders not to introduce tariffs during the oil crises.
When was the FRGs first economic recession?
1966-67
Why did the recession greatly effect guest workers?
Many of them were on one year renewable contracts without social benefits who did not have social benefits.
How many guest workers were in Germany in 1966 vs September 1967?
The number fell from 1.3 million to 991,000
Why had the government been spending so much before the recession?
Their social welfare policies.
Who was chancellor during the first recession?
Erhard
How did Schiller reorganize the economy during the recession?
He increased government planning, intervention and control for example subsidies for agriculture and the coal industry.
What was the 1967 economic stabilization law?
This allowed for government intervention in times of economic crisis to limit regional spending and introduced a five year plan system for all government spending.
What provision was added to the basic law in 1968?
It said that the federal government could move around money between Lander using money from more wealthy ones to provide more social welfare in the struggling ones.
How successful were Schillers economic policies?
They were regarded as having failed and he was replaced by Schmidt in 1922
When were the two oil crisis?
In 1973 and 1978
Why was oil so essential to the FRG?
The FRG had become reliant on oil rather than coal as fuel and car ownership pushed up petrol consumption.
What caused the oil crisis of 1973?
The fourth Arab Israeli war broke out and the OPEC put up prices sharply in 1973 and then again in 1978.
What was OPEC?
The organization of petroleum exporting countries.
How much of the FRGs fuel did it get from OPEC?
40%
Why did the economic crises cause issues for employment?
Unemployment rose which was made worse by the fact that the baby boomers were first hitting the job market.
What happened to guest workers during the oil crises?
They found that their contracts were not renewed and a ban was placed on recruiting guest workers. This did help the crisis stop getting worse.
Why was the FRG not hit as hard as other countries during the oil crises?
Its export rate helped and the economy recovered rapidly.
Why did oil consumption drop during the crises?
The government introduced measures such as car free Sundays and introducing speed limits on autobahns in order to save fuel. Propaganda pushed energy saving tactics in homes and industry and govemrent also began to seriously invest into atomic power. They also did not subsides oil prices like the USA and instead let them rise in line with their actual costs encouraging set backs. Government industries concerted to new fuels more rapidly then any other countries
What did the government bring in economically in 1975?
Public spending cuts and higher income tax.
What contributed towards increased hostility towards guest workers during the 1980s?
The gap between the richest and poorest widened in Germany.
What number did unemployment hit in 1981?
1.7 million, the highest since 1950
Why was the government deeply unpopular in 1981?
It cut public spending including benefits and housing allowance and was deeply unpopular especially with those who felt Germany should return to a social market economy.
How did the new government of 1982 react to the growing poverty?
They decided to cut spending even more fiercely, saying that welfare support just created dependency.
Why did chancellor Kohl say that productivity levels in Germany were decling?
Because of this dependency and the slack values of the baby boomers
How did Kohls government cut welfare spending?
It cut maternity benefit, public holidays and reduced the retirement age to 58
What did Kohls government sell off shares with?
State run institutions for example Volkswagen or a state owned airline.
How successful were Kohls policies?
They produced a slight but growing improvement and by 1989 unemployment was it its lowest whilst economic growth had risen.
What country was Adenauer especially concerned with building a trading relationship with?
France, he was much more concerned with Western Europe overall then achieving unification with the GDR
What was the single European act?
In July 1987 the euro became the official currency of Germany.
