What were the important components of Germany’s Economic Miracle?
In Germany, the year of 1946 was referred to as “the Year Zero” because it was the first year after the second World War ended. However this was not a happy time. The country was desolate and the people starving. Germany had been divided into four zones after the war: British, French, Soviet, and US. The US under President Truman recommended the measures spelled out in Joint Chiefs of Staff (JCS) 1067, which were a series of nefarious plans to transform Germany into peaceful pasture-land. He pressured the rest of the allies into agreeing. If he had his way, from then on, Germany would have no arms, no factories or industry, no education, and basic sanitation. The people were only allotted 1200 calories per day. However as 1947 rolled around, the population was willing to starve no longer and Germany’s citizens began to protest. Lucius Clay, an American Zone Military Governor, was rightfully concerned that the German people would revolt and communism could take over the state if conditions did not change. Three remarkable German men, Wilhelm Röpke, Conrad Adenauer, and Ludwig Erhard, convinced Clay to persuade allies to release their hold on Germany and to allow individual liberty for the people and free markets to flourish.
Wilhelm Röpke was a non-politician, a thinker, and a Professor of Austrian Economics who was strongly influenced by Ludwig von Mises. During WWII he fled the country for his life but came back after the war had ended, wanting to create a moral regime that worked for Germany. Röpke influenced and advised two other men who came to power after the war and helped point Germany in the correct direction.
One of these two men was Conrad Adenauer, the former Mayer of Cologne. He was dedicated to the resistance movement during the war and had even helped plan the assassination attempt on Hitler’s life. Because of this, he was due to be executed but the conclusion of the war saved him. He became the political head of Germany and finally teamed up with Erhard and Clay to push the US into allowing Germany self-government.
The second man influenced and advised by Röpke was Ludwig Erhard, an economist who convinced Britain to let the Germans manufacture goods and run factories again. In 1941 a new constitution was formed that allowed individuals to produce and exchange goods as they had before. The free exchange of goods was referred to as the “Social Market Economy” part of constitution. Erhard also managed to bring about a currency reform and eradicated the black market cigarette economy.
The main problem with the currency reform was that the Russians objected. Since they occupied one quarter of Germany and one half of the capitol, Berlin, they could and did block ally access to the free part of Berlin. Consequently the US started shipping in food and supplies to the German citizens via plane from 1948 through 1949. Fortunately, US and Ally soldiers were still occupying West Berlin at the time and could clear the airports for the US shipping planes to land. The Russian blockade and US solution are referred to collectively as the Berlin Blockade and the Berlin Airlift.
In the end, General Clay’s cooperation with the three Germans Wilhelm Röpke, Conrad Adenauer, and Ludwig Erhard, caused the lifting of JCS restrictions on Germany. Social market economy followed naturally, which allowed for individual liberties and a free market economy. Along with currency reform, these changes permitted the people of Germany to regain their footing and lift themselves out of the hole they had fallen into. By the early 50s, Germany was an independent state and a powerhouse of Europe. Germany was also invited to be part of the Western Alliance of nations (NATO).