Industrial Peace & Financial Stability

What was the government keen to do?

Establish more peaceful industrial relations by creating a sense of responsibility and ownership in trade unions (co-determination).

What happened to the number of strikes in West Germany?

It fell dramatically and the country enjoyed real industrial peace for 20 years; both sides reaped the benefits.

What helped drive recovery?

Housing construction.

What did government savings schemes encourage?

Home ownership.

What impact did rising confidence have?

Increased spending.

What was there growing demand for?

Consumer goods such as cars, televisions, refrigerators, vacuum cleaners.

What impact did increased consumption stimulate?

Economic expansion and reflected rising prosperity.

When was the Deutsche mark introduced?

1948.

When was the Bundesbank established?

1957.

What did the Bundesbank do?

• Controlled money supply and interest rates.

• Prevented inflation and overheating of the economy.

What did the Bundesbank’s role and new currency create?

Created confidence and long-term economic stability.

What did the FRG not do?

Pay reparations.

What was the case for defence spending?

It remained low until NATO membership in 1955.

What did low defence spending mean?

More money available for welfare and social spending - more support for democracy.