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Erhard as Economics Director in Bizone

A. J. Nicholls

in Freedom with Responsibility: The Social Market Economy in Germany 1918-1963

This chapter highlights and discuses Erhard's efforts and endeavours as economic director of the Bizone in stabilizing the economic crisis. Erhard was of the view that a currency reform without an ... More

This chapter highlights and discuses Erhard's efforts and endeavours as economic director of the Bizone in stabilizing the economic crisis. Erhard was of the view that a currency reform without an immediate return to free-market principles would be senseless. He undertook necessary measures to abolish controls on the allocation of manufactured products. He drafted legislation which gave him the power to overthrow the control system once the abolition of the old currency was implemented. He implemented the Guiding Principles Law before currency reform was introduced, to free the economy from a stifling blanket of controls that had to be taken very rapidly. Shifts in taxation and tax cuts benefited profits and property at the expense of the lower income groups.Less

Theory into Practice: The Struggle over Policy, 1948

A. J. Nicholls

in Freedom with Responsibility: The Social Market Economy in Germany 1918-1963

This chapter highlights the concept of the Economics Administration of the Bizone, during 1947–8, which was striving to be a system of improved planning and resource allocation, combined with the ... More

This chapter highlights the concept of the Economics Administration of the Bizone, during 1947–8, which was striving to be a system of improved planning and resource allocation, combined with the long-awaited currency reform. This system did not lead to the liberalization being demanded by neo-liberals such as Walter Eucken or Wilhelm Röpke, even though it was considered to be more flexible and at the same time more consistently applied throughout West Germany. There were differences in opinion over major issues to be resolved such as free market, employment, and the market-splitting scheme. The free-price mechanism was considered to be the real cure for currency reform, only if the Allies played their part by providing credits for imported goods. Kromphardt's market-splitting scheme has been elaborated. The success of the system of rationing proposed by Kromphardt depended on the allocation rights (Bezugsrechte) which would run through the entire economy, from the consumer to the first producer. The Beirat memorandum, dated 18 April 1948 ,stressed that the currency reform, when it came, could make sense only when combined with a fundamental reform of the existing system of economic controls, with the reintroduction of the price mechanism in the economy being the major recommendation of the report.Less

“The Danger Point is Berlin”

Daniel F. Harrington

in Berlin on the Brink: The Blockade, the Airlift, and the Early Cold War

Chapter 3 carries events forward to the imposition of the Soviet blockade, June 24, 1948. It describes the so-called “baby blockade” of early April, the London program, and Soviet responses to it. ... More

Chapter 3 carries events forward to the imposition of the Soviet blockade, June 24, 1948. It describes the so-called “baby blockade” of early April, the London program, and Soviet responses to it. The Western powers debated responses to Soviet pressure—diplomatic protests, sending armed convoys along the Berlin autobahn, evacuating dependents, and retaliation outside Germany—without decision. The US and Britain persisted with the London program, dismissing French warnings that the Soviets would retaliate in Berlin. To put the new West German government on a solid economic foundation, the Western powers introduced a new currency in their zones and then into Berlin; the Soviets responded by cutting the city’s supply lines from the West.Less

The Social Market and the Crisis in the German Economy, 1947–1948

A. J. Nicholls

in Freedom with Responsibility: The Social Market Economy in Germany 1918-1963

This chapter highlights the German economic and political crisis and the social market situation during the 1947–8 period. Modern industry suffered during the crisis period due to a concentration of ... More

This chapter highlights the German economic and political crisis and the social market situation during the 1947–8 period. Modern industry suffered during the crisis period due to a concentration of power. Free markets and convertible currencies replaced export and import quotas, bilateral trade deals, trade embargoes, and foreign-exchange controls. The Marshall Plan, announced in 1947 as a measure to stabilize the economic crisis, had its fair share of critics, as it was considered to be an exercise in American imperialism, or a capitalist manoeuvre to undermine socialism, and was considered to be responsible for worsening the Cold War. In spite of the progress made by the neo-liberals in propagating their ideas, the situation still looked very gloomy by the end of 1947, since the twelve months between the announcement of the Marshall Plan in June 1947 and the implementation of currency reform can hardly be described as a period of optimism in Germany.Less

West Germany in Ruins: The Aftermath of Defeat

A. J. Nicholls

in Freedom with Responsibility: The Social Market Economy in Germany 1918-1963

This chapter focuses on the economic situation of West Germany in the aftermath of defeat after World War II. Transport was badly hit, private dwellings and shops had also been destroyed in large ... More

This chapter focuses on the economic situation of West Germany in the aftermath of defeat after World War II. Transport was badly hit, private dwellings and shops had also been destroyed in large numbers, and the problems of homelessness worsened. Germans had made every possible effort to protect industries from aerial bombardment, dispersing it into safer regions and sometimes even putting it underground. The average worker now spent only four or five days (instead of the normal six days) at the conventional work-place in order to earn enough devalued currency to pay for the allowance of rationed goods. Political parties shared and made efforts towards collectivist solutions for economic problems. The neo-liberals suggested a currency reform which would eliminate the excess purchasing power, the freeing of prices, and the liberation of the market. The free-market position in the immediate post-war period suffered from the abolition of controls which seemed impossible without generous foreign credits. Foreign trade was dominated by the so-called ‘dollar gap’, or dollar shortage.Less

The Meiji ‘Restoration’

CHUSHICHI TSUZUKI

in The Pursuit of Power in Modern Japan 1825–1995

This chapter describes the Meiji reforms, together with the imperial restoration, that would constitute the Meiji Restoration. It introduces the progress of the anti-Bakufu movement (Tobaku). Then, ... More

This chapter describes the Meiji reforms, together with the imperial restoration, that would constitute the Meiji Restoration. It introduces the progress of the anti-Bakufu movement (Tobaku). Then, it covers a coup d'état and a civil war. Next, it deals with the Charter Oath and the imperial restoration. The Charter Oath, the emperor's oath to his ancestral gods, announced at the height of the civil war against the Bakufu forces, embodied the basic principles of the new government that was to be set up. In addition, the creation of the Tenno system is examined. The second coup d'état, of haihan-chiken (to abolish han and create ken), was to strengthen the central government by transforming the feudal han into units of a modern local-government system. Furthermore, the chapter looks at the Iwakura Embassy during 1871–3, land tax reform, a modern education system and a standing army, the Korean issue, the Kanghwa Treaty, and the Seinan Civil War, government sponsorship of industrialization, and the currency reform and foreign trade.Less

The SPD and the Triumph of Reform

A. J. Nicholls

in Freedom with Responsibility: The Social Market Economy in Germany 1918-1963

This chapter focuses on the success of the economic reforms of the Social Democratic Party of Germany (SPD). The balance of forces in the SPD due to the favour of the social market economy was the ... More

This chapter focuses on the success of the economic reforms of the Social Democratic Party of Germany (SPD). The balance of forces in the SPD due to the favour of the social market economy was the growing importance of the party's parliamentary delegation in Bonn. The prominent aims of the SPD's economic policy were full employment, the just distribution of wealth, and the stability of the currency. They made efforts to reform the value systems, the nature of human freedom, social justice, and socialism itself. Progress was extremely slow, but they moved steadily away from the certainties of class conflict into the fuzzier area of ethical socialism and social justice.Less

Multiple Currency Clauses and Currency Reform: The Austrian Coupon Cases

Rastko Vrbaski

in Money in the Western Legal Tradition: Middle Ages to Bretton Woods

This chapter presents a case study of the Austrian Coupon Cases of the 1870s and 1880s, which involved internationally issued bonds of Austrian railway companies that were originally denominated in ... More

This chapter presents a case study of the Austrian Coupon Cases of the 1870s and 1880s, which involved internationally issued bonds of Austrian railway companies that were originally denominated in multiple currencies. Some of these currencies became extinct when the German Empire was created in 1871 and they were merged into the German mark, which was based on gold and appreciated against Austrian silver currency. The disputes were about whether the debt was to be converted into the appreciated mark. The courts consistently ruled in favour of the bondholders, but their reasoning in the six principal decisions evolved: while the initial decisions applied a metallistic approach and treated the issue as a conflict of laws, the later decisions of the German Imperial Court developed a nominalist concept of monetary debt, and on that basis concluded that the law of the currency was universally applicable.Less

From “Ōkuma Finance” to “Matsukata Finance,” 1873–1881

Steven J. Ericson

in Financial Stabilization in Meiji Japan: The Impact of the Matsukata Reform

This chapter examines the transition from the expansionary policies of Ōkuma Shigenobu to the contractionary ones of Sano Tsunetami as background to the Matsukata reform, which in large measure ended ... More

This chapter examines the transition from the expansionary policies of Ōkuma Shigenobu to the contractionary ones of Sano Tsunetami as background to the Matsukata reform, which in large measure ended up combining his predecessors' approaches. It shows the critical difference between the Ōkuma and Matsukata approaches to financial policy. Ōkuma sought to engineer a rapid currency reform using the proceeds from overseas bond issuance while applying the savings from austerity to continue the expansionary economic policies he had pursued as finance minister. The adoption of his new foreign-borrowing scheme in the summer of 1881 signaled a softening of official commitment to fiscal retrenchment. Matsukata intended to continue the Sano initiatives with the exception of borrowing abroad and founding a British-style central bank. Yet in practice he would diverge from much of the Sano austerity program in ways that differed from both classical and neoliberal orthodoxy.Less

Erhard and the CDU

A. J. Nicholls

in Freedom with Responsibility: The Social Market Economy in Germany 1918-1963

This chapter focuses on Erhard's economic policies as economic director of the Bizone and his alliance with the CDU. Erhard considered that a party like the CDU would obviously give the freedom and ... More

This chapter focuses on Erhard's economic policies as economic director of the Bizone and his alliance with the CDU. Erhard considered that a party like the CDU would obviously give the freedom and worth of the individual personality high priority, and would also bring with it consequential requirements in the field of economic policy. The chapter also highlights the Ahlen Programme, a socio-economic statement influenced by Christian Socialist thinking including an apparent commitment to replace capitalist strivings for profit and power with devotion to the common good. The social market economy of Erhard is in sharp contrast to the so-called ‘free economy’ of the liberalistic variety. He was of the view that in order to prevent a relapse into the ‘free economy’, it is necessary to protect creative competition by independent control of monopolies.Less

Fiscal and Monetary Systems

Tirthankar Roy

in The Economic History of India, 1857-1947

According to Indian nationalists, the British colonizers pursued fiscal and monetary policies that benefited Britain and British enterprise, but refused to adopt policies favourable to India and ... More

According to Indian nationalists, the British colonizers pursued fiscal and monetary policies that benefited Britain and British enterprise, but refused to adopt policies favourable to India and Indian enterprise. In reality, British interests did not necessarily conflict with Indian interests. During the golden age of globalization, Britain and India shared the gains from trade and investment. The interests of Britain and India increasingly came into conflict only when the British economy slowed in the interwar period. This chapter examines how the government decided policies and describes the fiscal and monetary systems that provided the context in which the government functioned. It also discusses policymaking, trade policy, revenue and expenditure, the political and institutional context underlying public finance, fiscal policy in the princely states, the currency reforms of 1835, and the ‘Ratio Controversy’ and the Great Depression.Less

How Ordo-Liberal Is Germany? Ordo-Liberalism in Post-War National Unifying Mythology

Kenneth Dyson

in Conservative Liberalism, Ordo-liberalism, and the State: Discipling Democracy and the Market

This chapter examines the myth and reality of Ordo-liberal intellectual capture of Germany and the role of Ordo-liberalism in efforts to construct a new post-war national unifying myth. It focuses on ... More

This chapter examines the myth and reality of Ordo-liberal intellectual capture of Germany and the role of Ordo-liberalism in efforts to construct a new post-war national unifying myth. It focuses on the genesis of the concept of the social market economy and its relationship to Ordo-liberalism; on the distinction between fundamentalists and realists in Ordo-liberalism; and on the differences between philosopher-economists and statesmen-economists. Close attention is paid to the ideas and role of Ludwig Erhard and his network of support; the institutional appropriation of Ordo-liberalism by the Bundesbank, the federal cartel office, and the federal economic ministry’s economic policy division; and the role of Ordo-liberalism in competition policy, in European economic and monetary union, and in German policy during the euro area crisis. At the same time, stress is placed on the gaps in Ordo-liberal thinking and counter-national unifying myths, drawing on social Catholicism, social partnership, and civilian power. The chapter has three main case studies: of Ordo-liberalism in the Great Depression, focusing on the Brauns Commission, the Lautenbach Plan, and the role of Wilhelm Röpke; central bank independence, monetary policy reform in the early 1970s, and the ‘monetarist revolution’; and Alfred Müller-Armack’s proposal for a European Stabilization Board. These case studies use archival evidence. The chapter closes with reflections on the significance of Ordo-liberalism in Germany.Less

Conclusion: The Social Market Economy in Retrospect

A. J. Nicholls

in Freedom with Responsibility: The Social Market Economy in Germany 1918-1963

This chapter provides a conclusion regarding various aspects and theories of social market economy implemented in West Germany after the Great Depression. Income generated by the market was not ... More

This chapter provides a conclusion regarding various aspects and theories of social market economy implemented in West Germany after the Great Depression. Income generated by the market was not necessarily distributed with social justice or with social conditions acceptable to civilized people. A state's budget redistributed income, and it was important to establish the proper principles of social justice upon which such taxation measures are based, always assuming they were in conformity with the market. The West German economy has been a tremendous advertisement for the blessings of market forces and competition. Even the most determined workers could not satisfy the needs of their fellow citizens effectively without a market-orientated economy. Even though protectionism and the price-fixing of German industrial practice were not abolished completely, they did lose respectability. Anti-cartel and anti-monopolistic policies were more weakly applied, but the propaganda campaign which accompanied them served to inculcate the idea of competition into the political culture of West Germany as something positive. The market worked in a semi-automatic fashion, and required ‘sensible management’ (sinnvolle Bedienung), since the organization of credit and money could not in practice be set up as a self-operating mechanism.Less

The Making of the West German Borderlands, 1945–1955

Astrid M. Eckert

in West Germany and the Iron Curtain: Environment, Economy, and Culture in the Borderlands

This chapter explores the economic consequences of the early inter-German border and introduces the economic heterogeneity of the borderlands through snapshots of four localities along the ... More

This chapter explores the economic consequences of the early inter-German border and introduces the economic heterogeneity of the borderlands through snapshots of four localities along the demarcation line. As the tightening demarcation made itself felt, a coalition of borderland advocates pressured the federal government to help prevent their regions from turning into economic backwaters. These lobbying efforts revealed that borderland residents cared less about living in the shadow of the Iron Curtain than about living in the shadow of the “economic miracle” to their west. In their pitch for state aid, borderland advocates declared their regions to be economically, socially, and politically more vulnerable as a result of the Cold War than regions that had “merely” been damaged by the recent war. Their efforts yielded the “zonal borderland aid” program that soon became an integral part of the border regions’ economic and cultural life.Less

Long Live the Korean Empire: Hopes, Fulfillment, and Frustrations

Eugene Y. Park

in A Family of No Prominence: The Descendants of Pak T?khwa and the Birth of Modern Korea

This chapter brings the Paks closer to the forefront of documented history as they thrived in the period of the Korean Empire (1897–1910). None achieved the kind of prominence needed to win ... More

This chapter brings the Paks closer to the forefront of documented history as they thrived in the period of the Korean Empire (1897–1910). None achieved the kind of prominence needed to win widespread recognition in the historiography of the era. Nonetheless, the Paks’ evident adoption of Western ideas and practices as Korea struggled to strengthen itself as a modern nation-state allows insights into the lives and aspirations of Korea's rank-and-file chungin as a whole, complementing previous studies which focused on famous characters. Unlike the individual cases of chungin who continued to prosper even after Korea's colonization by Japan, the Paks’ newly found opportunities in politics, business, and cultural circles began dissipating with Japanese ascendancy, from the Russo-Japanese War and through the subsequent Japanese control of Korea as a protectorate.Less

1947

Arsenii Formakov

Emily D. Johnson (ed.)

in Gulag Letters

Formakov’s letters from 1947 focus on his preparations for his release, the introduction of the zachet system of time-off for good work, and also his concerns about his wife’s health and his family’s ... More

Formakov’s letters from 1947 focus on his preparations for his release, the introduction of the zachet system of time-off for good work, and also his concerns about his wife’s health and his family’s economic situation. For much of this period Formakov was a “de-convoyed” inmate, authorized to move about outside the camp without a guard. This made it easier for him to mail illicit correspondence to his family. Letters also mention rumors preceding the 1947 currency reform, suggesting that even in distant labor camps knowledge of the coming devaluation of the ruble was widespread, despite the efforts of the authorities to keep plans secret.Less