Ludwig Erhard

Who was Ludwig Erhard?

West Germany’s Economics Minister and later Chancellor.

He became known as the ‘father of the economic miracle’ as he helped rebuild the West German economy.

What was Erhard’s role in 1948?

He oversaw the currency reform in Bizonia and introduced the new currency, the Deutsche Mark.

What was put in place to control inflation in West Germany?

The currency reform of 1948 introduced the Deutsche Mark to replace the worthless old currency.

Why was the old currency a problem after WW2?

It had become almost worthless, causing inflation and encouraging black market trading.

What happened under the black market during WWII?

People traded goods illegally because money had little value.

Items like cigarettes became forms of currency.

What else did Erhard do beside currency reform?

He removed many price controls and rationing regulations to encourage free trade and economic recovery.

How did the Americans react to Erhard’s reforms?

They strongly supported Erhard because they wanted economic recovery and stability in West Germany.

Was Erhard’s currency reform successful?

Yes.

Shops became stocked again, black market activity reduced, and confidence in the economy improved.

What was the ‘economic miracle’

The rapid economic recovery and growth of West Germany during the 1950s and 1960s.

Why did West Germany experience the ‘economic miracle’?

Currency reform, Marshall Aid, Skilled workforce, coal and iron resources in the Ruhr, growth in world trade.

What was the social market economy?

A system combining free-market capitalism with some government support for welfare and workers.

Was the social market economy better than a planned economy?

The textbook suggests it was more successful because it encouraged competition, economic growth, consumer demand and rising living standards.

How did unemployment change during the economic miracle?

Unemployment fell sharply.

1950 - 1.87 million unemployed.

1965 - 0.15 million unemployed.

Why were refugee’s important to West Germany’s recovery?

Refugees provided a large supply of disciplines and skilled workers for industry.

How did world trade help West Germany recover?

It increased demand for German exports, especially after the creation of the ECSC and EEC.