The FRG Economy Flashcards
(40 cards)
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
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
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
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
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
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
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
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
9
Q
What was the Equalisations of Burden Act?
A
1952
- A military government tax to redistribute income to the poor
10
Q
What was the rate of unemployment in Jan 1949?
A
937,000
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
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’
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
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
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
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
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
What were living standards like in 1945?
- Families torn apart and homeless
- 1/5 of all housing bombed flat
- 1/3 of housing damaged in bombings
26
What did the gov do to help the living standards in 1945?
- Ministry of housing set up
- Rents were frozen and tax concessions granted
- Housing associations both social and private
27
How many people had a fridge (1963 and 1985)
- 1963 only 63%
| - 1985 82%
28
How many people had a TV (1963 and 1985)
- 1963 only 42%
| - 1985 82%
29
How many people had a washing machine (1963 and 1985)
- 1963 only 36%
| - 1985 87%
30
What were the successes of the FRG economy near the end?
- 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
What remained the biggest issue even at the end of the FRG?
- 1% of households owned 35% of wealth
- 1973 they owned 78%
- 1988 they owned 45%
32
Who was concerned with European integration as soon as the FRG was set up?
- 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
What was the OEEC and what did it achieve?
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
What was the EPU?
Est in 1950
- European Payment Union (EPU) set up by the OEEC
- Manage economic co-operation across various national finances including the FRG
35
What was GATT?
Est in January 1948
- FRG joins General Agreement on Tariffs and Trades
- Established favourable trade agreements amongst its members
36
When did the FRG join the International Monetary Fund?
13th August 1952
- Oversees the stability of the world currencies
37
When does the FRG join the ECSC?
18th April 1951
- European Coal and Steel Community with France, Italy, Belgium, Netherlands and Luxembourg
- Sets up preferential trade links between these countries
38
When does the FRG join NATO?
- 9th May 1955
- An anti-communist alliance of Western Countries
39
When does the FRG sign the Treaty of Rome and what does this mean?
25th March 1957
- Becomes one of the founding members of the European Economic Committee (EEC)
40
What was Co-determination?
- 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
