Page 70 - The Making of the German Post-war Economy

THE FREIBURG SCHOOL 43

inflation control for the Office of Military Government for Germany.
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After contacts between the working group and the American authorities
ended in November 1945, Walter Eucken alone remained in touch with
them. Owing to Eucken’s participation in meetings with the then Director
of the Finance Division, Joseph M. Dodge, and the German public
finance economist and advisor to the US Government, Gerhard Colm,
some have assumed that he had an influence on the Colm-Dodge-
Goldsmith Plan to reform the German finances and currency. Eucken,
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however, stated that his proposals had hardly affected it. Nevertheless,
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the Freiburg ordo-liberal’s scholarly works attracted the interest of the
Allies and were praised by the French Gouvernement Militaire en Allemagne,
for which Eucken and the AGEvB elaborated reports until spring 1946.
31
Appreciation of Walter Eucken’s expertise is also shown by his
appointment to the Sachverständigenrat (Council of Economic Advisors) to
the Länderrat in the American zone of occupation and later in the Bizone.
Within this commission, responsible for preparing a German antitrust law,
Eucken and Böhm successfully promoted their competition order.
32
In January 1948, the ordo-liberals were given another influential body in
which to promote their economic and socio-political conception: the
Advisory Council on Economic Affairs within the Administration for
Economics. By advocating free price setting and the prevention of
economic concentration by competition, the council’s first report
published on 1 April 1948 reveals an ordo-liberal influence. There was a
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consensus that the introduction of a new and stable currency could put an
end to structural inflation and so make the macroeconomic reason for
comprehensive control of prices and production obsolete. Hence, the
return to sound money was coupled with a reform of the economic
system in general. The majority pleaded for a genuine market economy,
albeit with fixed prices for some goods during a transition period. A
minority, however, made a case for a mixed economy, i.e. for the parallel
existence of markets and central planning. The experts’ eventual proposal
contained integral parts of the later Gesetz über Leitsätze für die Bewirtschaftung
und Preispolitik nach der Geldreform, the so-called ‘Leitsätze-Gesetz’ (Guiding
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Principle Law), by which Ludwig Erhard as Director of the bizonal
Administration for Economics initiated price decontrol simultaneously
with currency reform. Similarly with regard to other legal and economic
initiatives, such as monetary and credit policies, Ludwig Erhard
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consulted the WB VfW regularly and maintained close ties with the panel
chaired by Franz Böhm.
The controversial Guiding Principle Law, which finally enabled the
currency reform, was primarily authored by Walter Eucken’s disciple
Leonhard Miksch, who later assumed a position within the Administration