Economic developments 1945 - 1947

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Soviet zone

  • Soviet zone had far less war damage, productive capacity was roughly 15%.
  • Soviets initial policy was to take the maximum amount of reparations (possible 3 times as much as agreed at Potsdam)
  • Aimed to take their occupation costs whilst dismantling what productive capacity was left, whole industrial plants were shipped to the USSR.
  • Soviets were not expecting the division of Germany to last.
  • July 1945 - A new system of centrilised state banking was introduced to replace private banks, and private insurance companies were merged into 5 public corporations.
  • September 1945 - Mines and factories were centrilised and 7,000 large estates belonging to Nazi activists  were seized and turned into collective farms
  • June 1946 - SAG's were formed with an amalgamation of 213 firms.
  • June 1947 - In response to economic development in the West the soviets set up the German Economic Commission to coordinate economic policy.
  • April 1948 - Nazi enterprises became VEB's.
  • SAGs and VEBs controlled 60% of industry by 1948.
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Western zones

  • Initially attempted to eliminate Germany's war potential and provide reparations while permitting sufficent reconstruction to satisfy the immediate needs of the German people.
  • March 1946 - Level-of-industry Plan agreed by the Four Powers. (Germany's standard of living should be kept at that of 1932 and should not exceed that of other European countries, industrial capacity should be reduced to 50-55% of the 1938 level, limits on the output of industries and armaments and war-related industries should be banned.)
  • Americans proposed that the Germans should only pay reparations once they were economically self-supporting, and Russian seizures of factories should be deducted from the total reparations - but the Russians refused.
  • May 1946 - The American zone stops supplying Russians with goods until they stopped acting independantly and started treating Germany as one economic unit. In response the Russians stopped delivering agricultural products to the Western zones.
  • The Americans believed that the weakening of the West German economy would leave it open for a communist take-over as the Russians had failed to cooperate over reparations and had spread communism into Eastern Europe.
  • Paris Conference 1946 - Americans invited the others to work together in economic union, but only the British were in favour, who had already put forward this idea in the Bevin Plan
  • September 1946 - Heavy industries would no longer be dismantled if they were necessary for a German peacetime economy and the American zone was prepared to merge with others.
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  • Jan 1947 - American and British zone combine to form Bizonia to allow for efficent joint economic administration.
  • British and Americans went to great lengths to avoid French and Soviet critisisms that they were forming any type of political unification.
  • Little transformation occured in the Western zone although subtle pressure was put on Trade Unions to weaken communist or socialist influence and was strictly restricted to economic matters.
  • June 1947 - Marshall Aid announced
  • August 1947 - Level-of-Industry plan revised to increase living standards further.
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