What were the reasons for the 'Economic Miracle'? Flashcards
Who was elected the first Chancellor of the FRG?
Adenauer
What were the problems facing Adenauer to do with the economy?
-recession
-unemployment
-price rises
What were the problems facing Adenauer to do with society?
-need for housing after WW2 deconstruction
-to accommodate refugees
What were the problems facing Adenauer to do with politics?
-FRG still controlled by occupying powers at the start
What were Adenauer’s aims?
-Western integration
-the ‘German question’->reunification but with the capitalist (doesn’t want to include the communists->’Magnet Theory’
What were Adenauer’s aims with economic policy?
-Erhard’s ‘social market’ policy
What were Adenauer’s social aims?
-to create social consensus through concessions (not as important as the other aims)
What is ‘Magnet Theory’?
-attract support from East Germany
-to make the FRG so attractive that the DDR want to join the FRG
What had been the economic impacts of the occupation of Germany?
-humanitarian crisis
-inflation crisis
-Black market economy
What was the humanitarian crisis?
-in the British and American zones they had struggled to come with the humanitarian crisis, large volumes of refugees and former exiles returning
-many people had fled when the Nazis moved in so would want to move back
-women wanted to go back to work after taking over men’s jobs/roles during the war
What was the inflation crisis?
-too much wage and price control to cope with the inflation crisis
What was the Black market economy?
-Black market economy (don’t want) flourished until the introduction of the new currency in 1948 by Erhard
Who introduced the currency reform?
-Erhard in 1948
Who was Erhard?
-Minister of Economics 1949-1963
-Vice Chancellor from 1957
-Chancellor 1963-1966 (after Adenauer)
What were the Social Market Economy aims?
-government getting involved in the economy to help it become more stable
-aims of the social market economy were to increase consumption and therefore cause economic growth
-aimed to combine political and economic freedom with social justice and security
-aimed to get rid of the Black Market
What did Erhard do?
-ended state regulation which led to increased production
-abolished price controls
How did what Erhard did lead to an increase in the economy?
-meant that the prices go down so the production went up so people had more jobs and there was a greater access of products
What was the key aim of the ‘economic miracle’?
-rising consumption and economic growth were the key aims
What was the ‘foundation crisis’? (1949-1950)
despite potential positives there was an initial crisis:
-price rises not matched by wages
-shortages of some resources needed for rebuilding eg coal
-initial increase in imports led to serious balance of payments deficit (lacking)
-lack of foreign currency investment
-high unemployment 13.5% by 1950
What was the Korean War’s impact?
-the Korean War led to an increase in exports to America, providing economic stimulus
When was economic recovery clearly occurring?
-by 1925 economic recovery was clearly occurring
What do they want to do to help the economy?
-want an equal balance of imports and exports to help the economy
What did the Foundation Crisis evidence about the economic miracle?
-the foundation crisis evidences that the economic miracle wasn’t perfect
-there was a volatile period before the economic boom before the economic miracle
Why did the Korean war make such a big difference to Germany?
-it led to an increase in exports to America which provided an economic stimulus
-it led to an increase in exports because Germany’s main exports are machines, cars, tanks, guns etc->German engineering is a lot better than others
What trading aspects had changed which is evidence for the ‘economic miracle’?
-from 1950 the balance of trade became positive due to the growth of exports-> by 1954 the FRG was the 3rd biggest trading power in Europe especially for tools, machines, cars, electronics and chemical products->at first the DM was undervalued so the price of goods was reasonable
What had the economic growth averaged at which was evidence of the ‘economic miracle’?
-economic growth averaged at 8% a year->2.3% was now seen as pleasing in Britain
What unemployment statistics are evidence of the ‘economic miracle’?
-by 1955 unemployment down to 4.2% and then full employment was even finding work for refugees->3 million from the GDR before 1961->by the early 1960s there were labour shortages leading to recruitment of foreign labour from Italy and Turkey
What were the building blocks for making the FRG an ‘economic giant’? (9)
-Erhard’s reforms including currency reform prior to division
-FRG’s access to extensive resources
-Population was well educated and skilled
-Marshall Plan - built factories and equipped them with modern machinery using the money
-Refugees – often well educated/skilled
-Increase in demand for capital and consumer goods
-Effectiveness of Bundesbank
-Govt expenditure low – no reparations or defence costs
-World Trade – ECSC (European Coal and Steel Community) 1951 and EEC (European Economic Community) 1957
