West Germany: Economic Recovery in the years 1945 - 1965

Question 1

Identify 3 examples of economic instability after WW2?

Answer 1

• 20% of housing was destroyed with a further 30% damaged
• Food consumption per day dropped between 950 to 1150 calories
• A lot of infrastructure and industries were damaged

Question 2

Who was appointed Economics Minister of the FRG in 1949?

Answer 2

Ludwig Erhard

Question 3

What was Ludwig Erhard’s vision for the economy?

Answer 3

To create a social market economy

Question 4

What happened to the currency in 1948 and why did this help the economy?

Answer 4

The Deutschemark replaced the Reichsmark which increased peoples confidence in the economy and led to rise in expenditure and production of consumer goods —> stabilise the economy

Question 5

What happened to price controls and rationing and why did this help the economy grow?

Answer 5

On June 24 1948, price control on products were abolished to create competition between businesses. This meant that more food products were being sold and there was now a competition to find best deals for products in shops.
Rationing was also abolished

Question 6

What happened to wages and why did this help the economy to grow?

Answer 6

Wages stayed fixed until Nov. 1948 to allow businesses to establish and stabilise themselves, as well as maximise their profits

Question 7

What was the 1952 Equalisation of Burdens Act and why did this help the economy grow?

Answer 7

This saw an additional tax placed on all assets, which was then redistributed to many German people who suffered under the Nazi rule and during WW2

Question 8

What was the consequence of Erhard’s economic reforms in the short term?

Answer 8

Some businesses collapsed and they couldn’t afford to pay wages, so unemployment did begin to increase vastly
The reforms did not bring about immediate economic recovery as although factories and businesses could produce again, they had to spend huge amounts replacing machinery.

Question 9

What were the consequences of Erhard’s economic reforms in the long term?

Answer 9

The FRG experienced enormous economic growth, particularly after 1955

Question 10

What is the period of 1955 - 1965 known as?

Answer 10

The economic miracle

Question 11

What happened to the FRG’s Gross National Product between 1950 - 1955?

Answer 11

It almost doubled

Question 12

What happened to unemployment in the FRG by 1965?

Answer 12

Unemployment had fallen to less that 1%

Question 13

What happened to trade and exports from the FRG in the 1950s and 1960s?

Answer 13

• In 1954, the FRGs rapid frowth of exports meant it had already overcome its trade deficit and was the 3rd largest trading power in the world

Question 14

What happened to standards of living in the FRG in the 1950s and 1960s?

Answer 14

Standards of living rose and people spent their money on consumer goods

Question 15

Identify 4 reasons that led to rapid economic growth between 1955 - 1965?

Answer 15

• Marshall Ais
• The Korean war (1950-53)
• New investment
• Refugees

Question 16

How much Marshall Aid did the FRG receive by 1951?

Answer 16

Approx. $1.5 billion

Question 17

Why did the Marshalll Plan cause economic growth in the FRG?

Answer 17

Helped to provide Germany with the money needed to build new factories and buy new machinery

Question 18

When was the FRG allowed to start providing war materials again?

Answer 18

In 1955 when the FRG joined NATO they were allowed to

Question 19

Why did the Korean was (1950 - 53) cause economic growth in the FRG?

Answer 19

There was a higher demand of FRG goods, which led to greater employment and an increase in production of goods

Question 20

Why did new investment in businesses cause economic growth in the FRG?

Answer 20

Reputation of German goods improved abroad, so exports grew and profits of businesses grew

Question 21

How many workers moved from to GDR to the FRG in the 1950s?

Answer 21

3.6 million