The factors leading to Germany’s remarkable recovery and growth during the post-World War II era have been widely debated by historians. Some suggest it was the effect of the Marshall Plan, while others suggest that Germans were just an industrious people. Volker R. Berghahn’s The Americanisation of West German Industry analyzes America’s impact in changing German industrial structure and culture over four decades. On the other hand, in his book The West German Economy 1945-1955, Alan Kramer suggests that it was Germany’s preconditions for growth that enabled it to catch up and return to its previous economic capacity. More recently, James Van Hook’s Rebuilding Germany suggests that beyond Western influences and German economic conditions, German leaders were able to effect policies and economic conditions that propelled the German economy towards rapid growth.

Berghahn’s analysis focuses on the U.S.’ influence on German industrial development. He suggests that while West Germany initially resisted the American economic model, it was worked into German industry over time. He attributes this resistance to the continuity in German industrial leadership, an older generation leadership that supported concentration and cartelization, from the Nazi-era to the postwar era. By not thoroughly denazifying German industrial leadership, America actually slowed down Germany’s Americanization. However, Berghahn suggests that it was America’s influence that ultimately turned German away from its wartime autarkic tendencies towards oligopolies and freer trade. While they all agreed that cartels and monopolies would be eliminated, America (and Britain and France) had differing opinions of how deconcentrated industries should be. As Britain slowly relinquished power over the American-British zone, the Americans began to take a greater lead, shaping German industry to best suit America’s Cold War interests (AWGI 87-97). Yet, Berghahn admits that there were limits to American influence. Beyond the deconcentration of the steel, coal, and banking industries, other industries faced “no more than marginal restructuring…[leading to] a plateau…from which the reconcentration of West German industry could be initiated” (AWGI 110). Berghahn then demonstrates that only when locals promoted aspects of the American model, such as Erhard’s support of market competition, the American ideology was able to take root in German policy.

Kramer’s The West German Economy reads like a textbook, using facts and figures on production, capital, and finances to provide an overview of Germany’s economic recovery. He suggests that Germany grew rapidly, but only to catch up to its prewar growth trajectory. Germany took advantage of three preconditions for growth: the presence of a large capital stock, the availability of skilled labor, and pro-growth policies promoted by the American and British occupational governments. Even though Germany appeared to be devastated by the war bombings, the Allies found it was the transport and communications infrastructure that was destroyed, not the core of German industrial capacity. Kramer explains that Germany’s capital, such as machinery, buildings, and vehicles, was at least 20 percent higher in May 1945 compared to 1936 (WGE 17). Germany built up its industrial capacity during the war, so increasing its peacetime output required shifting from armament to peacetime production. The training workers received for wartime production also increased Germany’s human capital, ready to be directed towards peacetime production. Kramer emphasizes that this human capital was supplemented by the influx of immigrant refugees from the East, who were generally skilled or motivated to work towards a better life in the West (WGE 222-223). Finally, the British and American push for lighter reparations and provision of financial assistance enabled Germany to jumpstart its economy. Kramer emphasizes that increasing tensions between the West and East in the Cold War increased the West’s willingness to rebuild and reintegrate Germany’s economy. In particular, the Korean War caused a shortage in wartime necessities, increasing the West’s demand for German industrial output.

In his book Rebuilding Germany, Van Hook focuses more on the political dynamics that shaped the German recovery. His central thesis is that despite the presence and influence of the occupational governments, the Germans had a degree of autonomy in negotiating and determining their economic policy. He documents the shifts in politics that eventually led to Ludwig Erhard serving as director of the economic council in the American-British zone. Van Hook suggests that the success of the currency reform of 1948 with the simultaneous elimination of many price controls jumpstarted Germany’s recovery. While this success was boosted by completion of the transportation and power infrastructure by Erhard’s predecessor Johannes Semler, financial support from the Marshall Plan, and the Americans and British’ desire for Germans to take initiative to rectify their own economy, Van Hook argues that “only Erhard dared [to eliminate price controls] decisively and in conjunction with the long-awaited currency reform” (RG 142). He praises Erhard’s role in negotiating the Investment Aid Law of 1952 and Anti-Cartel Law of 1957, countering critics’ assertions that Erhard veered from free-market ideology in his leniency towards industrial power and centralization in those statutes. Alternatively, Van Hook suggests that by directing investment in a “market-conforming” way and outlawing cartels, Erhard did what he could to temper the actions of his market-planning opponents.

I argue that although the occupation powers had a degree of influence in West Germany, their presence and involvement in local affairs was not what fueled German economic growth. Even German knowledge of Americanization was not the catalyst for growth. While Erhard may have learned about American ideas through his advisers or own experiences studying American industries, he consciously chose to pursue similar anti-cartel and free trade policies for Germany, while resisting American pressure to return to “corporatist forms of organization” (RG 192). Thus, it was the preconditions (which included occupation powers’ financial support), the right leadership, and market-oriented economic policies that worked in tandem to generate Germany’s rapid economic growth.

Bibliography

 Berghahn, V. R. The Americanisation of West German Industry. Cambridge Cambridgeshire ; New York: Berg, 1986.

Hook, James C. Van. Rebuilding Germany: The Creation of the Social Market Economy, 1945-1957. First Edition edition. Cambridge, UK ; New York: Cambridge University Press, 2004.

Kramer, Alan. West German Economy, 1945-1955. Bloomsbury Academic, 1991.

Between 1870-1935, Germany alternated between supporting free trade and turning insular, shifting drastically between different economic policies. Germany’s stance towards free trade was largely shaped by the politicians in power— the political goals of Germany’s leaders overshadowed economic goals of efficiency and growth. Beginning in the late 1870’s, German leaders abandoned liberalism in favor of protectionist and autarkic policies.

The unification of Germany under the Second Reich strengthened economic ties between previously independent German states, encouraged free trade, and propelled Germany into participation in the world economy, where she rose to dominance in steel production and established a worldwide reputation as a leader in the electrical and chemical industries. However, the German leadership would soon reverse its stance towards free trade when the German heavy industries and agriculture faced competitive threats. Farmers and industrialists united against the bankers, finished goods industries, and the export sector in an alliance now known as “the marriage of iron and rye,” opposing free trade in favor of protection for agriculture and heavy industry. The German government shifted its policies again when facing a forced autarky during World War I, adopting a policy of “war socialism.” She commandeered her economy and regulated consumption, eventually rationing food, raw materials, and manpower to extend the life of her resources. After losing the war, post-war reparations further crippled Germany’s economy, slowed her recovery, and diminished her future capacity to pay while hyperinflation destabilized the economy. After the U.S. finally took leadership in the global economy by sponsoring the Dawes and Young Plans, Germany was able to quickly rebuild. Within six to seven years, her industries returned to their pre-war positions as leaders of the chemical, electrical, and optical industries; her exports returned to prewar levels by 1926. However, soon after, the consequences of the Great Depression drove the Nationalist Socialists into power, and Germany shifted its economic policies once again, returning to a planned economy with fixed prices and regulated foreign trade.

Despite the consequences of the German leadership’s political endeavors, Germany’s leading industries established Germany as a global industrial power and returned her to economic leadership and integration, even after facing the disruptions and consequences of a world war.