FRG Economics 1945-89

Context: 8 May 1945 Germany surrendered. The german economy was ruined and people were starving. Allies occupated the country

Problems in the German economy after WW2:

• Rationing introduced to deal with refugees and homeless
• Transport links crossed zones which hindered the economy
• Hyperinflation
• Wages and prices were controlled
• Reichsmark was worthless
• Shops were empty
• Markets broken down

How the West German economy recovered between 1948-52:

• Marshall Plan 1948- economic aid given to Western zones which set off the creation of Deutschmark
• Duetschmark- new currency helped stabilise the economy and breakup the black market 
• Erhard's reforms: 24 June given power to abolish almost all essential rationing and all price controls, meant that cakes, veg, butter for sale. People stopped hoarding goods
• Equalising of Burdens Act- Tax on all assets to help those who lost everything, helped people start again

Erhard did not bring immediate economic recovery:

- Some businesses failed after currency reform as they couldnt afford to pay wages. Other businesses managed to keep going but had to lay off workers -> Unemployment rose 1948-50 but began to fall 

- Car production in 1959 4x more than 1950

- Steel production doubled

The Economic Miracle 1955-66:

1955…