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The FRG > The FRG Economy > Flashcards

The FRG Economy Flashcards

1
Q

What was the refugee crisis post war?

A
  • 10M refugees were in Germany
  • Initially were a major crisis to house them and feed them
  • They were a long term asset for the work force
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2
Q

What were the main economic issues facing Germany post war?

A
  • Currency was effectively useless and the wages of workers were therefore useless
  • Transport links and communication was hampered and therefore stopping economic recovery
  • Formation of a black market due to increasing prices, e.g sugar went from RM120 to RM180
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3
Q

What was the Marshall Plan and how much money was given through it?

A
  • Economic funding from the US

- Gave 1.4 million dollars to the three Western Zones

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4
Q

When was the DM created and what did it cause?

A
  • 20th June 1948 to the three western zones
  • DM6.5 per RM100 and DM60 to each adult
  • Split the FRG and GDR (GDR formed their own currency)
  • Led to Berlin blockade
  • Polarisation between the western zones and Soviet Zones
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5
Q

When was Ludwig Erhard promoted, and what was his primary belief in?

A
  • March 1948, Director of economic administration
  • 1949 to 1963 Economics Minister
  • Social Market Economy = A ‘socially responsible’ free market economy
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6
Q

What were Ludwig Erhards first steps to recovery?

A
  • Creation of the new currency DM
  • 24th June 1948 abolished rationing appear from some essentials and abolished price controls
  • Wages were fixed til November 1948 to allow businesses to establish themselves
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7
Q

Were Erhard’s early policies a success?

A
  • Cakes, vegetables, butters and eggs available in shops and non-food items (FOCUS ON CONSUMER GOODS)
  • Higher quality goods, people stopped hoarding and the black market broke down
  • Car production up 4.5x from 1950-59
  • Steel production doubled
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8
Q

Was 1948-49 a recession?

A
  • At first wages didn’t rise as fast as prices and caused a payment deficit
  • Unemployment as high as 13.5%
  • Businesses could not pay wages
  • Businesses had to lay off workers
  • Worst was over by 1951
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9
Q

What was the Equalisations of Burden Act?

A

1952

- A military government tax to redistribute income to the poor

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10
Q

What was the rate of unemployment in Jan 1949?

A

937,000

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11
Q

What was the rate of unemployment in 1955?

A

1,000,000

- NOTE this is not as high as it seems, it was falling from higher and the economy was improving

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12
Q

Who opposed a social market economy?

A
  • Bundestag, Economic Council and Britain were afraid it would lead to exploitation of workers
  • Industrialists wanted pre-command economy with cartels and price fixing
  • Socialists wanted more nationalisation and state control
  • However the USA supported due to their similar ‘New Deal’
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13
Q

How did the Korean War help the economic miracle of 1955-66?

A
  • 1950 war in Korea broke out and they needed supplies
  • The FRG’s industrial, chemical, steel and electric good were in high demand
  • 1955 joined NATO allowing rearmament and selling of weapons
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14
Q

How did Investment help the economic miracle of 1955-66?

A
  • More efficient equipment and new factories were built
  • Higher quality goods and lower prices allowed them to compete
  • Exports grew stimulating more investment
  • Manufacturers of consumer goods bought more raw materials
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15
Q

How did an influx of workers help the economic miracle of 1955-66?

A
  • Lots of refugees meant lots of guest workers
  • During the 1950’s 3.6 million workers moved from the GDR to the FRG
  • GDR workers were highly educated and skilled, .e.g doctors, engineers etc
  • These workers accepted low wages and wanted to integrate to West German culture quicker
  • They were employed on short term contracts, allowing the gov to save and redistribute money to housing etc
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16
Q

What were the main problems after the economic miracle?

A
  • Once people bought something they did not buy again (good quality)
  • Aug 1961 Berlin Wall stopped workers coming across
  • Real Economic Growth slowed after 1966
  • Lots of spending on social welfare
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17
Q

What was the increase in social welfare spending?

A
  • 1965 = DM 46.7 million

- 1970 = DM 115.9 million

18
Q

What were the features of the recession of 1966-67?

A
  • Guest workers only had 1 year contracts
  • 1966, 1.3 million | Sep 1967, 991,000
  • Productivity fell
  • Too much welfare spending
19
Q

How did Karl Schiller attempt to battle the recession of 1966-67?

A
  • 1967 Economic Stabilisation Law to allow for gov intervention
  • A Five Year plan for gov spending
  • Provision to Basic Law (1968) to move money between Länder
  • Regarded as a failure, Helmut Schmidt replace him in 1972
20
Q

What was the oil crisis of 1973 and 1978?

A
  • October 1974 Fourth Arab-Israeli war broke out and OPEC pushed up oil prices
  • 1973 140 million tonnes was DM 32.8 billion
  • 1978 140 million tonnes was DM 49 billion
  • Unemployment rose, baby boomers were entering the market and bans were placed on recruiting guest workers
21
Q

What were the oil prices like before the crisis?

A
  • FRG used lots of petrol therefore oil instead of coal

- 1972 140 million tonnes of oil cost DM 10.8 billion

22
Q

How did the FRG battle the oil crisis?

A
  • Propaganda, e.g ‘car free’ Sundays to save oil and invest in atomic power
  • Speed limits on Autobahn
  • Did not subsidise oil, allowed the price to rise and consumption to fall unlike USA
  • Germans switched to new fuels and increased public spending
  • Higher income tax was instated in 1975
23
Q

What were the main challenges to the economy in the 1980’s?

A
  • Large gap between the rich and the poor
  • Hostility towards guest workers
  • 1981 had 1.7 million unemployed
  • Gov had cut spending on benefits and housing allowance causing great debate
24
Q

What did Helmut Kohl do in 1982 and why?

A
  • Cut spending as he believed it caused dependancy
  • Cut social welfare, maternity benefits, public holidays and reduced retirement aged to 58
  • Sold off shares in state run companies, e.g Volkswagen, to introduce partial privatisation
  • 1989 unemployment was at its lowest and economic growth improved
25
Q

What were living standards like in 1945?

A
  • Families torn apart and homeless
  • 1/5 of all housing bombed flat
  • 1/3 of housing damaged in bombings
26
Q

What did the gov do to help the living standards in 1945?

A
  • Ministry of housing set up
  • Rents were frozen and tax concessions granted
  • Housing associations both social and private
27
Q

How many people had a fridge (1963 and 1985)

A
  • 1963 only 63%

- 1985 82%

28
Q

How many people had a TV (1963 and 1985)

A
  • 1963 only 42%

- 1985 82%

29
Q

How many people had a washing machine (1963 and 1985)

A
  • 1963 only 36%

- 1985 87%

30
Q

What were the successes of the FRG economy near the end?

A
  • Real wages had stayed ahead of prices
  • Most people received a state pension
  • 1980’s 90% of people received a state pension
  • 1980 people lived on average 12 years longer than the 1950’s
31
Q

What remained the biggest issue even at the end of the FRG?

A
  • 1% of households owned 35% of wealth
  • 1973 they owned 78%
  • 1988 they owned 45%
32
Q

Who was concerned with European integration as soon as the FRG was set up?

A
  • Chancellor Adenauer was concerned to establish closer ties with Europe
  • Much like Stressemann he saw it as vital for the success of Germany both economically and politically
33
Q

What was the OEEC and what did it achieve?

A

Est April 16th 1948
- Organisation for European Economic Cooperation (OEEC) and it contained the western zones
- It was set up to manage European economic recovery
- Administered the Marshall Plan aid in Europe

34
Q

What was the EPU?

A

Est in 1950
- European Payment Union (EPU) set up by the OEEC
- Manage economic co-operation across various national finances including the FRG

35
Q

What was GATT?

A

Est in January 1948
- FRG joins General Agreement on Tariffs and Trades
- Established favourable trade agreements amongst its members

36
Q

When did the FRG join the International Monetary Fund?

A

13th August 1952
- Oversees the stability of the world currencies

37
Q

When does the FRG join the ECSC?

A

18th April 1951
- European Coal and Steel Community with France, Italy, Belgium, Netherlands and Luxembourg
- Sets up preferential trade links between these countries

38
Q

When does the FRG join NATO?

A
  • 9th May 1955
  • An anti-communist alliance of Western Countries
39
Q

When does the FRG sign the Treaty of Rome and what does this mean?

A

25th March 1957
- Becomes one of the founding members of the European Economic Committee (EEC)

40
Q

What was Co-determination?

A
  • Was established by laws passed in 1951 and 1952
  • Was a call for industrial peace and led to a dramatic fall in the number of strikes and established industrial peace for 20 years

The FRG (9 decks)

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