economic miracle

• Recovery started with the creation of Bizonia in 1947 and with economic policies introduced before 1949, such as:

  • removing price controls, which stimulated business by allowing free competition between private enterprises
  • removing controls over wages and production, allowing workers a role in management and decision-making, which resulted in fewer strikes
  • ending inflation through currency reform
  • reducing marginal tax rates, so that those on higher incomes had more money to spend on goods.
• The West also had a number of advantages, as it possessed raw materials, had not suffered as much damage in the war as was feared, and had not had as many reparations taken as in the East. The work ethic of the population and the availability of cheap labour from the East meant that the West could meet the demands of the occupying forces.
• Further stimulus was provided by Marshall Aid, although historians now question its importance. It had brought in only $2 billion by October 1954, and in 1948-49 provided less than 5% of German national income. The Germans were also paying reparations and restitution payments to the Allies.
• The Korean War (1950-53) increased the demand for goods the Ruhr could supply. This was helped by the fact that other nations were unable to supply war materials, with the result that exports doubled.
• The economic recovery helped to provide political stability. As a result, Adenauer remained in power from 1949 until his resignation in 1963.
• Government policies may also have helped, although historians disagree on this. Ludwig Erhard developed the 'social market economy', combining government legislation and capitalism to produce 'prosperity for all'.
• Many Germans had co-operated with the Nazis. Adenauer's government needed to win their support, as democracy did not have widespread approval.
• Cities had been damaged and property lost. Nearly 25 per cent of the population was fatherless, and women were forced out of work and back into the home because cheap labour was available from the Eastern zones. Refugees from the East numbered 12-13 million, and, along with Gastarbeiter (guest workers), they provided cheap labour.
• Adenauer was able to win the support of those who lost their possessions in the war through the 1952 Equalisation of Burdens Act. This introduced a tax on property and funds not affected by the war and redistributed to those who had suffered the most.
• Adenauer created an affluent society and concentrated on 'building up' for the future. However, there was unequal distribution of wealth, and social inequalities resulted.
• On the positive side, there were housing improvements: 430,000 houses were built by 1952, and 4 million by 1957. Wages had risen 400 per cent between 1949 and 1963; there was a ready availability of consumer goods and many people were travelling widely. Social welfare was available, with pensions and an insurance-based health and welfare system. These improvement ended any communist appeal and helped to create the image of the Spiessbürger (petty bourgeois, characteristic of the Federal Republic of Germany (FRG), with his cigar, car and n home in a rebuilt city.
• There was little social change. The old elites still dominated. However, by the 1960s, new tensions emerged as economic growth lessened. There was growing electoral support for right wing groups at a local level and unrest from the left, which was often led by the young, who knew cultural ideas.
• Before the FRG was established, reintegration had occurred, and quickly, so that by the late 1940s, de-Nazification was meaningless. The government compensated those who had suffered, but exonerated most Nazis from their crimes. The need to care for war victims and refugees was balanced against responsibilities to the survivors
• Former Nazi civil servants regained the jobs they lost during de-Nazification through Law 131. As a result, 40-80 per cent of civil servants were ex-Nazis, and former Nazis continued working in the judiciary and universities. Pensions could be claimed for service to the Nazi state and this meant that former Nazis were not alienated. Even Adenauer employed a former Nazi as his personal adviser. The policies ensured that few felt shame or fear of retribution. However, in 1958, an office to investigate possible war crimes opened.
• Adenauer's decline started with his handling of the decision not to run for president in 1959. His withdrawal damaged his image and reputation. This was reinforced further by his failure to intervene over the Berlin Wall.
• In 1962, the weekly news magazine, Der Spiegel, criticised the readiness of German defence forces. When questioned on it, the defence minister misled the Bundestag. This was made wors as the government appeared to try to silence the magazine by raiding its offices and arresting some of the journalists. This provoked an outcry, as it appeared as if the government was acting like a dictatorship, and, ultimately, it resulted in Adenauer's resignation.   
• who was the economic minister in 1947

  erhard
• erhard blamed the allies for their decisions as under allied leadership the black market flourished- cigarettes were used to trade
• • the allies made a new currency to get rid of the worthless currency
  • erhard got rid of the allied price controls
  • overnight the black market disappeared
• the influx of refugees for the GDR meant continuous employees