Page 84 - The Making of the German Post-war Economy

THE COLOGNE SCHOOL 57

the implementation of his economic policy required a majority in the
Economic Council. Precisely here, on 21 April 1948, Erhard delivered a
kind of a government economic policy statement by which he informed
the parliament about his economic policy and forthcoming measures.
After this rhetorically brilliant speech that he concluded by picking up
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Walther Rathenau’s famous words ‘the economy is our fate,’ the
delegates were familiar with the Social Market Economy and its prophet.
Although there was no unanimous applause, the Liberal Democrats and
the conservatives widely welcomed the transition to a more market-
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oriented economy. Thereupon, the chairman of the CDU in British
occupation zone, Konrad Adenauer, invited Erhard to introduce and to
explain his socio-economic conception to the party members during the
party convention in Recklinghausen on 28 August 1948. In a visionary and
stirring speech, entitled Marktwirtschaft im Streit der Meinungen (Market
Economy in Dispute), Ludwig Erhard defended his concept of the
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Social Market Economy alluding to the dualism between a controlled
economy and a market economy. In view of the upcoming elections,
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Adenauer, who was initially sceptical about Erhard, was not only
impressed by the polarising slogan, i.e. ‘Controlled or Market Economy’,
but also by the efficacy of Erhard and his programme. The foundation
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for a successful political alliance was laid.
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The Director for Economics also proved the ability to assert himself in
parliament, i.e. the Economic Council, and in politics in general. After
Erhard’s Leitsätze-Gesetz was passed by the economic parliament on 17/18
June, he summarily enforced the law that abolished virtually all rationing
and lifted price controls. It was an astonishingly bold manoeuvre, the
more so given that a great deal of it had been done without the prior
consultation and agreement of the military governors. The French and the
British officials were aghast and furious. The Americans were nervous.
The following day, the United States’ Military Governor, General Lucius
D. Clay, who was rather an administrator than a soldier which certainly
influenced his approaches that generally proved to be beneficial for
Germany, confronted Erhard on his decision to alter the rationing
regulations in view of the fact that all his advisors were opposed to this
move which they considered a terrible mistake. To Clay’s surprise, the
Director of the Administration for Economics responded without
hesitation: ‘Herr General, I did not alter the rationing regulations, I
abolished them! [...] Pay no attention to your advisors, mine tell me the
same thing.’ Clay seemed impressed by this attitude and realised that
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stopping the dynamic won by Erhard’s decision would have been the
wrong move. Hence, a dismissal of the head of the Administration for
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Economics was out of question. Eventually, the Allied military