Page 155 - The Making of the German Post-war Economy

128 THE MAKING OF THE GERMAN POST-WAR ECONOMY

depending on money supply in relation to the available goods and
services, a subsequent increase in unemployment, the complete
cancellation of monetary assets (both working capital and private savings)
leading to illiquidity of companies and the loss of spending power which
in turn were necessary to stimulate the domestic economy, further the
increasing public debt and the impoverishment of the population. Most
importantly, though, it was fundamental to restore faith in the new
currency as well as governance, i.e. the Economic Council; but both
increasingly suffered a further decline in spring 1948.
Whereas the Allies were cautious in expressing public criticism, and so
merely stated that the Economic Council did not yet live up to its
potential, in the view of the German public, by contrast, the economic
5
parliament had gambled away any credibility or authority, and failed as
6
their political representation. Although there were some media, such as
the semi-official paper of the American occupying authorities Die Neue
Zeitung, suggesting a predominantly positive view on the Economic
Council, this could not belie the then prevalent public criticism and
7
disappointment about the German authorities’ lack of leadership.
According to an OMGUS survey on the public reception of the bizonal
administration, the confidence that Bizonia would improve living
conditions dropped from 73 per cent to 53 per cent between October
1947 and January 1948. In March 1948, 44 per cent said that conditions
had been unfavourably affected, while only 36 per cent said that they were
better. Thus only 20 per cent of the respondents were satisfied with the
work of the Economic Council, whereas 64 per cent expressed
dissatisfaction; half of the dissatisfied commented that nothing was getting
done. The first post-war parliament was widely discredited and critical
8
petitions sent to what was initially believed to be an effective
representation of the people were increasingly replaced by supportive
proposals. At this stage, an overwhelming majority was in favour of the
9
popular determination of policy as opposed to its determination by
politicians and many an individual saw Germany ‘like a rudderless vessel
10
without sails and without captain drifting in [a] tremendous storm and
dense fog of political and economic uncertainty more and more towards
the rocks which mean economic and political wreck by total
impoverishment of state and population.’
11
As a matter of fact, however, West Germany had a captain and he was
everything but irresolute. Quite the contrary, the new Director of the
Administration for Economics in the Bizonal Economic Council, Ludwig
Erhard, who succeeded Johannes Semler on 2 March 1948, had extensive
plans indeed to reorganise the post-war economy. These reforms, centred
on economic liberalisation following a currency reform, however, met