Economic recovery 1945-66 Flashcards
(41 cards)
How did the Allies prevent another war?
Industries considered to be war industries were banned. This included the steel industry. Other industries that were war related had their outputs restricted.
How were reparations to be taken in each zone of occupation?
In equipment and machinery.
Who undermined the chance of economic recovery post-war in order to take reparations?
The French and Soviets who dismantled many remaining factories.
How did the worthlessness of the Reichsmark damage the post-war economy?
The black market thrived and it was hard to get workers when their wages hardly bought anything.
How was economic recovery post-war hampered?
Despite the ACC trying to overcome difficulties, transport and communication links crossed the zones and each zone was run differently.
Why did some Germans leave and some never return after the war?
There was so much physical and economic devastation in Germany.
What is an example of Germans staying abroad after the war?
There were 160,000 German prisoners of war in France who decided to stay there afterwards.
How many people came to the FRG after the war as refugees?
10 million from Eastern Europe under the reallocation of land and people agreed at Potsdam.
Who was Minister of Economics between 1949-63?
Ludwig Erhard
What kind of economy did Erhard introduce?
A free market economy
When was a new currency introduced?
The Deutschmark replaced the Reichsmark in 1948.
What act did Erhard pass and what did this do?
The Equalisation of Burdens Act 1952 - it compensated those who had lost everything in the war.
What happened to unemployment between 1948-50?
It rose from 442,000 to 1,800,000.
What was the short term impact of Erhard’s reforms?
- Factories and businesses could start producing again but they had to replace machinery and train workers.
- Some businesses failed after the currency reform because they could not afford to pay wages.
- Having to lay off workers.
- People stopped hoarding the goods from shops - began to shop for price and quality.
What did Erhard abolish?
All but essential rationing and price controls
When did unemployment start to fall?
1955 - 1,000,000
What happened to car and steel production between 1950-59?
Car production was 4.5x greater. Steel production doubled.
Who opposed Erhard’s reforms?
- The Economic Council in the Bundestag opposed his policy of converting to a social market economy.
- Britain also opposed the idea, supporting the labour union leaders who feared it would lead to an exploitation of the workers by business owners.
- Industrialists were not happy because they no longer had cartels and price fixing.
- Socialists wanted to nationalise industries and use state control, not allowing a capitalist market to set its own levels.
Who supported Erhard’s reforms?
USA - had a fairly positive experience of a social market economy under the New Deal.
How did Erhard get enough support in the Bundestag to continue his policies?
The combination of a capitalist market with a responsible government provided a social safety net for the poorest.
How did Erhard make sure workers were represented?
- Allowed business tax concessions
- Removed wage restrictions
- BUT Encouraged the setting up of trade unions to make sure workers had adequate representation in wage negotiations.
- All businesses had workers councils.
- In 1951 there was a policy of co-determination allowing for workers representatives on managerial boards in industry.
How much of the Marshall plan had Germany been given by 1952?
$1.4 billion - not that much
How did Marshall aid help boost the economy?
It provided a stimulus to the economy and an important boost in morale. It was the first step in allowing Germany to get back on its feet.
How much of the FRG’s national income did Marshall aid account for?
Less than 5%
