Page 164 - The Making of the German Post-war Economy

1948 – ASPIRATION AND APPREHENSION 137

of no confidence against the Director of the Administration for
Economics in November 1948 marked the climax of public and political
criticism.
In the following months the economy began to cool off. After the
inflationary burst in summer and early autumn, the price level was
approaching the limit set by the monetary frame and the fiscal surplus; in
addition the anticipation of the first Marshall-Plan imports may have eased
inflationary pressures somewhat. Between October and December the
annualised increase of consumer prices dropped to 8.8 per cent and that
of producer prices to 2.9 per cent. The final victory of the Deutsche Mark
became evident in the exchange rate against commodity substitutes, i.e. in
the prices of tobacco and coffee. In December 1948, these goods were
traded for half of their pre-reform prices. Due to this generally
72
noticeable turnaround in the German post-war economy, which, contrary
to popular belief, was not caused by the currency reform in June 1948, but
rather by the overall steady economic growth experienced since 1947,
73
the criticism of Erhard’s economic policy abated though did not fall silent
in view of the still high unemployment. Essentially, however, after one
74
of the most dramatic and indeed decisive years in German political and
economic history, economic liberalism was firmly anchored in both the
political and the public debate about Germany’s post-war economic
model, and the sense of doom and gloom prevalent in previous years
75
was replaced by a growing sense of optimism and economic recovery.