Wirtschaftswunder

The term Audio|De-Wirtschaftswunder.ogg|Wirtschaftswunder (German for "economic miracle") describes the rapid reconstruction and development of the economies of West Germany and Austria after World War II. The expression was used by "The Times" in 1950 and originally described the rapid economic growth from 1950 to 1974 following German adoption of policies advocated by American consul Friedrich List in his National System. Beginning with the replacement of the Reichsmark with the Deutsche Mark as legal tender (a similar reform was adopted in Austria, where the Austrian Schilling was established), a lasting period of low inflation and rapid industrial growth was overseen by the government led by German Chancellor Konrad Adenauer and his finance minister, Ludwig Erhard, who went down in history as the "father of the German economic miracle." In Austria, the nationalisation of industries and efficient labor practices led to a similar period of economic growth. The era of economic growth raised Germany and Austria from total wartime devastation to developed nations in modern Europe. With the foundation of the European Common Market, Germany's economic growth stood in contrast to the struggling conditions at the time in the United Kingdom.

West Germany

The West German "Wirtschaftswunder" was partly due to the economic aid provided by the United States and the Marshall Plan, but mainly due to the currency reform of 1948 which replaced the Reichsmark with the Deutsche Mark as legal tender, halting rampant inflation. This act to strengthen the German economy had been explicitly forbidden during the two years that the occupation directive JCS 1067 was in effect. JCS 1067 had directed the U.S. forces of occupation in Germany to "…take no steps looking toward the economic rehabilitation of Germany". The Allied dismantling of the West German coal and steel industries decided at the Potsdam conference was virtually completed by 1950, equipment had then been removed from 706 manufacturing plants in the west and steel production capacity had been reduced by 6,700,000 tons. [Cite journal |last=Gareau |first=Frederick H. |author-link= |year=1961 |title=Morgenthau's Plan for Industrial Disarmament in Germany |journal=Western Political Quarterly |volume=14 |issue=2 |pages=517–534 |url= |issn= |doi=10.2307/443604 ] The industrially important Saarland with its rich coal fields was not returned to West Germany until 1957.

In addition to the physical barriers that had to be overcome for the German economic recovery (see the Morgenthau Plan) there were also intellectual challenges. The Allies confiscated intellectual property of great value, all German patents, both in Germany and abroad, and used them to strengthen their own industrial competitiveness by licensing them to Allied companies. [C. Lester Walker [http://www.scientistsandfriends.com/files/secrets.doc "Secrets By The Thousands"] , Harper's Magazine. October 1946] Beginning immediately after the German surrender and continuing for the next two years the U.S. pursued a vigorous program to harvest all technological and scientific know-how as well as all patents in Germany. John Gimbel comes to the conclusion, in his book "Science Technology and Reparations: Exploitation and Plunder in Postwar Germany", that the "intellectual reparations" taken by the U.S. and the UK amounted to close to $10 billion. [Norman M. Naimark The Russians in Germany pg. 206. (Naimark refers to Gimbels book)] [ The $10 billion compares to the U.S. annual GDP of $258 billion in 1948.] [The $10 billion compares to the total Marshall plan expenditure (1948-1952) of $13 billion, of which Germany received $1,4 billion (partly as loans).] During the more than two years that this policy was in place, no industrial research in Germany could take place, as any results would have been automatically available to overseas competitors who were encouraged by the occupation authorities to access all records and facilities.Meanwhile thousands of the best German researchers were being put to work in the Soviet Union and in the U.S. (see Operation Paperclip)

Contrary to popular belief, the Marshall Plan, which was extended to also include Western Germany after it was realized that the suppression of the Western German economy was holding back the recovery of the rest of Europe, [ [http://www.time.com/time/archive/preview/0,10987,887417,00.html "Pas de Pagaille!"] , July 28, 1947] was not the main force behind the "Wirtschaftswunder". [http://www.econlib.org/library/enc/GermanEconomicMiracle.html German Economic "Miracle" by David R. Henderson] ] wayback | url = http://www.germany.info/relaunch/culture/history/marshall.html | date = 20060709055340 | title = "Marshall Plan 1947-1997 A German View" by Susan Stern ] Had that been the case, other countries such as the United Kingdom (which received higher economic assistance from the plan than Germany) should have experienced the same phenomenon. However, France did experience a similar phenomenon (known as Trente Glorieuses). Nonetheless, the amount of monetary aid (which was in the form of loans) received by Germany through the Marshall Plan (about $1.4 billion in total) was far overshadowed by the amount the Germans had to pay back as war reparations and by the charges the Allies made on the Germans for the ongoing cost of occupation (about $2.4 billion per year). In 1953 it was decided that Germany was to repay $1.1 billion of the aid it had received. The last repayment was made in June 1971.

The Korean war (1950-53) led to a worldwide increased demand for goods, and the resulting shortage helped overcome lingering resistance to the purchase of German products. At the time Germany had a large pool of skilled and cheap labour, partly as a result of the deportations and migrations which affected up to 16.5 million Germans. This helped Germany to more than double the value of its exports during and after the war. Apart from these factors, hard work and long hours at full capacity among the population in the 1950s, 1960s and early 1970s and extra labour supplied by thousands of Gastarbeiter ("guest workers") provided a vital base for the economic upturn.

From the 1950s onwards, West Germany had one of the world' strongest economies. The East German economy also showed strong growth, but not as much as in West Germany, due to the bureaucratic system and continued reparations to the USSR in terms of resources.

Ludwig Erhard, who served as the Minister of the Economy in Adenauer's cabinet from 1949 until 1963 and later became Chancellor, is often associated with the German "Wirtschaftswunder".

Austria

Austria was also included in the Marshall Plan and can thus be included in any consideration of the "Wirtschaftswunder". Through the nationalisation of some industries (VOEST, AMAG) and yet more long working hours, full economic capacity was reached. Using West Germany as a guide, the currency was stabilised when the Schilling was reintroduced in place of the Reichsmark. This economic policy was known in journalistic circles as the Raab-Kamitz-Kurs, named after Chancellor Julius Raab and his Finance Minister Reinhard Kamitz similar to the German Adenauer-Erhard-Kurs.

In the 1950s the first Gastarbeiter from Southern Italy and Greece arrived in the country, as more manual labour was required to maintain the economic upswing.

Notes

ee also

*Celtic Tiger
*East Asian Tigers
*Greek economic miracle
*Japanese post-war economic miracle
*Baltic Tiger
*Miracle of Chile
*Spanish miracle
*Industrial plans for Germany
*Morgenthau Plan
*Marshall plan
*GARIOA
*Miracle on the Han River
*Trente Glorieuses
*Long boom

External links

* [http://www.econlib.org/library/enc/GermanEconomicMiracle.html German Economic "Miracle"] - The library of economics and liberty
*PDFlink| [http://assets.cambridge.org/052183/3620/sample/0521833620ws.pdf Rebuilding Germany] |147 KiB
* [http://trumanlibrary.org/oralhist/harkortg.htm Interview with Gunther Harkort] Representative of the Federal Republic of Germany to the Economic Cooperation Administration (ECA), 1949-1952.
* [http://www.trumanlibrary.org/oralhist/clayl.htm Interview with General Lucius D. Clay] Deputy to U.S. General Dwight D. Eisenhower, 1945; deputy military governor, Germany (U.S.) 1946; commander in chief, U.S. Forces in Europe and military governor, U.S. Zone, Germany, 1947-49; retired 1949.
* [http://www.trumanlibrary.org/oralhist/draperw.htm Interview with General William Henry Draper Jr.] Chief, Economics Division, Control Council for Germany, 1945-1946; Military Government Adviser to the Secretary of State, Moscow Conference of Foreign Ministers, 1947; Under Secretary of War, 1947; Under Secretary of the Army, 1947-1949;
* [http://time-proxy.yaga.com/time/archive/preview/0,10987,799988,00.html 'Time Magazine "Faceless Crisis"'] , April 4, 1949
* [http://www.ena.lu?lang=2&doc=465 Letter from Konrad Adenauer to Robert Schuman] (26 July 1949) Warning him of the consequences of the dismantling policy. (requires Flash Player)
* [http://www.ena.lu?lang=2&doc=9922 Picture of demonstration against dismantling] (7 June 1949) Workers in the Ruhr demonstrate against the dismantling of their factories by the Allied forces of occupation. (requires Flash Player)
* [http://www.ena.lu?lang=2&doc=9923 Picture: dismantling the Iron and Steel Industry] ‘We want to work, we will help you to rebuild Europe' Workers at dismantled plant protest. (requires Flash Player)
* [http://www.ena.lu?lang=2&doc=6785 Picture: 12,000 factory workers demonstrate against the dismantling of German industry] (19 August 1949) (requires Flash Player)