How Economies Bounce Back From Total Collapse: The German Economic Miracle (1948-1957)

History Unplugged Podcast

History Unplugged

Society & Culture, History

4.2 • 3.7K Ratings

🗓️ 5 May 2020

⏱️ 41 minutes

🔗️ Recording | iTunes | RSS

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Summary

After World War II the German economy was a smoldering ruin. Scorched-earth policies destroyed 20-70% of all houses. Factories, hospitals, and schools were bomb craters. Germans only ate 1,000-1500 calories a day. There was no food in the stores because price controls disincentivized shop keepers and farmers to sell anywhere except the black market.

But something happened in 1948 that changed everything. Revolutionary market changes were introduced by Minister of Economics Ludwig Erhard that overnight caused stores to re-open, factories to fire up, and delivery trucks to clog the streets. In a year, food production and domestic output skyrocketed. By 1950, journalists spoke of a Wirtschaftswunder (economic miracle). By the 1960s, West Germany’s economy was envied by most of the world and had surpassed struggling Great Britain.

In today’s episode, we look at how economies manage to rebuilt after total devastation. How do you rebuild a factory when the roads are blown up, there are no materials available to make it, and hyperinflation has made the money so worthless that nobody will hire you? How do you restart a nation’s economic engine when there are no parts? The example of Western Germany is a good answer to many of these questions.

Transcript

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0:00.0	The History of the History
0:12.0	History is in just a bunch of names and dates and facts.
0:15.0	It's the collection of all the stories throughout human history that explained how and why we got here.
0:20.0	Welcome to the History Unplugged Podcast, where we look at the forgotten, neglected, strange, and even counterfactual stories that made our world what it is.
0:29.0	I'm your host, Scott Rank.
0:32.0	In recent history, probably nobody had as broken of an economy as Germany did after World War II.
0:46.0	Because of the war and Hitler's scorched earth policy, about 20% of all houses were destroyed.
0:52.0	Food production in 1947 was only 51% of its level in 1938.
0:59.0	Rationine meant that people were only consuming between 1,000 and 1,500 calories per day, barely above the starvation level.
1:07.0	Industrial output in 1947 was only a third of its 1938 level.
1:12.0	Most of the working-h men in Germany were dead.
1:15.0	There were hundreds of thousands of refugees in Germany who were fleeing the advancement of the Soviet Union.
1:22.0	Germany was even more wrecked than Japan.
1:25.0	The fire bombing of Dresden had completely destroyed that city, and it was more destructive than the atomic bombs dropped on Hiroshima and Nagasaki.
1:33.0	The city of Kallon had dropped from 750,000 to less than 32,000.
1:38.0	Most of the country's historical billions in churches were destroyed.
1:42.0	For all those people who were left homeless, they had to live in shanty towns that would look like a slum in South Africa.
1:48.0	Industrial output didn't exist, the money was worthless, and a pack of American-made cigarettes that a GI gave out of charity could be worth more on the black market than hundreds of German marks.
1:58.0	William Peterson, a member of the Allied occupation forces, described Germany this way.
2:03.0	German men and women for the most part, ragged, hollow-eyed, thin, four-learn-looking, peddled what wealth had escaped the bombing and burning.
2:12.0	Silver, jewelry, zice binoculars, cameras, china, frequently chipped, and brick-a-brack, including asteris, lamps, clocks, and cheap paintings, all at fancy prices.
2:23.0	I saw a used commonplace alarm clock go for the equivalent of $85 in 1945.
	...

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