Page 103 - The Making of the German Post-war Economy

76 THE MAKING OF THE GERMAN POST-WAR ECONOMY

With regard to that reform, however, the German authorities enjoyed
little potential for influence. Although the Economic Council had even
appointed a separate committee to prepare a monetary reform, namely the
Sonderstelle Geld und Kredit within the Administration for Finance, in
October 1947, and even though this panel of experts – once chaired by
Ludwig Erhard, now by Erwin Hielscher – submitted a Draft Law on the
Reorganisation of German Finance to the Allied Bipartite Control Office
in February 1948, the German proposal was eventually not
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considered. Nevertheless, the currency reform and the subsequent
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amelioration of the general economic situation were widely associated with
the Director of the Administration for Economics, Ludwig Erhard, who
had announced the reform together with its far-reaching implications for
regulatory policy to the general public in a broadcast on 21 June 1948.
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However, once the general euphoria about the new currency gave way
to disillusion and disappointment due to rising prices forced up by the
enormous demand and relatively low production, strikes and even affrays
took place all over Germany in the following months, and the SPD as the
advocate of the poor felt justified in presenting a motion of no confidence
against Erhard in the Economic Council on 17 August 1948. This
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attracted considerable media attention upon which the Social Democrats
hoped to capitalise; yet, in the event, the endeavour was to fail by 47 votes
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to 35 inter alia due to the absence of eight SPD members. After the
press reported about the behaviour of the delegates which in other
respects followed the whip in all caucuses and accepted the command of
Kurt Schumacher without a word of protest even if they were of another
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opinion, various leading Social Democrats feared for the public image
of the SPD as a whole. In view of these negative headlines, the party
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executive suggested to publicise the positive activities and achievements of
the social democratic party representation in the Economic Council.
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While the SPD recognised the importance – if not necessity – to integrate
the public by informing about its course of action, the absence of concrete
party directives based on an overall economic programme constituted a
handicap for the SPD parliamentary group. The lack of coordination
between party and its parliamentary representation was detrimental to the
reputation of the SPD as a whole. Despite various complaints sent to
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the party executive, for instance by the SPD in Hesse-Kassel that ‘in all
reports on the activity of the Economic Council the opinion [about the
SPD] was not favourable’ and the perception of Herbert Kriedemann
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that ‘the reporting on the social democratic activity in the Economic
Council is [...] actually in disorder,’ the party leadership did not react to
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amend this situation. This inactivity confirmed the fact that Schumacher
underestimated the competence of the Economic Council and thus the