M a r k E . S p i c k a MonographS in gErMan hiStory VoluME 18 Selling the Economic Miracle Economic Reconstruction and Politics in West Germany, 1949-1957 This open access edition has been made available under a CC BY-NC-ND 4.0 license thanks to the support of Knowledge Unlatched. Not for resale. Selling the Economic Miracle This open access edition has been made available under a CC BY-NC-ND 4.0 license thanks to the support of Knowledge Unlatched. Not for resale. Volume 1 Osthandel and Ostpolitik: German For eign Trade Policies in Eastern Europe from Bismarck to Adenauer Mark Spaulding Volume 2 A Question of Priorities: Democratic Reform and Economic Recovery in Postwar Germany Rebecca Boehling Volume 3 From Recovery to Catastrophe: Municipal Stabilization and Political Crisis in Weimar Germany Ben Lieberman Volume 4 Nazism in Central Germany: The Brownshirts in ‘Red’ Saxony Christian W. Szejnmann Volume 5 Citizens and Aliens: Foreigners and the Law in Britain and the German States, 1789–1870 Andreas Fahrmeir Volume 6 Poems in Steel: National Socialism and the Politics of Inventing from Weimar to Bonn Kees Gispen Volume 7 “Aryanisation” in Hamburg Frank Bajohr Volume 8 The Politics of Education: Teachers and School Reform in Weimar Germany Marjorie Lamberti Volume 9 The Ambivalent Alliance: Konrad Adenauer, the CDU/CSU, and the West, 1949–1966 Ronald J. Granieri Volume 10 The Price of Exclusion: Ethnicity, National Identity, and the Decline of German Liberalism, 1898–1933 E. Kurlander Volume 11 Recasting West German Elites: Higher Civil Servants, Business Leaders, and Physicians in Hesse between Nazism and Democracy, 1945–1955 Michael R. Hayse Volume 12 The Creation of the Modern German Army: General Walther Reinhardt and the Weimar Republic, 1914–1930 William Mulligan Volume 13 The Crisis of the German Left: The PDS, Stalinism and the Global Economy Peter Thompson Volume 14 “Conservative Revolutionaries”: Protestant and Catholic Churches in Germany After Radical Political Change in the 1990s Barbara Thériault Volume 15 Modernizing Bavaria: The Politics of Franz Josef Strauss and the CSU, 1949–1969 Mark Milosch Volume 16 Sex, Thugs and Rock ‘N’ Roll. Teenage Rebels in Cold-War East Germany Mark Fenemore Volume 17 Demonstrating Reconciliation: State and Society in West German Foreign Policy toward Israel, 1952–1965 Hannfried von Hindenberg Volume 18 Selling the Economic Miracle: Economic Reconstruction and Politics in West Germany, 1949–1957 Mark E. Spicka Monographs in German History This open access edition has been made available under a CC BY-NC-ND 4.0 license thanks to the support of Knowledge Unlatched. Not for resale. S ELLING THE E CONOMIC M IRACLE Economic Reconstruction and Politics in West Germany 1949–1957 Mark E. Spicka Berghahn Books New York • Oxford This open access edition has been made available under a CC BY-NC-ND 4.0 license thanks to the support of Knowledge Unlatched. Not for resale. First published in 2007 by Berghahn Books www.berghahnbooks.com ©2007, 201 8 Mark E. Spicka Open access ebook edition published in 201 8 All rights reserved. Except for the quotation of short passages for the purposes of criticism and review, no part of this book may be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage and retrieval system now known or to be invented, without written permission of the publisher. Library of Congress Cataloging-in-Publication Data Spicka, Mark E. Selling the economic miracle : reconstruction and politics in West Germany, 1949-1957 / Mark E. Spicka. p. cm. -- (Monographs in German history ; . 17) Includes bibliographical references and index. ISBN 1-84545-223-2 (hardcover : alk. paper) 1. Germany (West)--Economic policy--1945-1990. 2. Germany (West)--Economic condi- tions--1945-1990. 3. Germany (West)--Social policy--History--20th century. 4. Germany (West)--Politics and government--1945-1990. 5. Free enterprise--Germany (West)--Histo- ry--20th century. I. Title. HC286.5.S7223 2007 330.943'0875--dc22 2006100353 British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library ISBN: 978-1-84545-223-0 hardback ISBN: 978-1-78920-640-1 open access ebook An electronic version of this book is freely available thanks to the support of libraries work- ing with Knowledge Unlatched. KU is a collaborative initiative designed to make high quality books Open Access for the public good. More information about the initiative and links to the Open Access version can be found at knowledgeunlatched.org. This work is published subject to a Creative Commons Attribution Non- commercial No Derivatives 4.0 International license. The terms of the license can be found at https://creativecommons.org/licenses/by-nc-nd/4.0/. For uses beyond those covered in the license contact Berghahn Books. This open access edition has been made available under a CC BY-NC-ND 4.0 license thanks to the support of Knowledge Unlatched. Not for resale. To Susan, Margaret, and Natalie This open access edition has been made available under a CC BY-NC-ND 4.0 license thanks to the support of Knowledge Unlatched. Not for resale. This open access edition has been made available under a CC BY-NC-ND 4.0 license thanks to the support of Knowledge Unlatched. Not for resale. C ONTENTS List of Illustrations ix Acknowledgments xi List of Acronyms xv Introduction 1 1. Origins of the Social Market Economy and the Currency Reform of 1948 26 2. Market or Planned? The 1949 Bundestag Election 49 3. The Korean Crisis, the Social Market Economy, and Public Opinion 94 4. Public Relations for the Social Market Economy: Die Waage 108 5. Creating a CDU/CSU Public Relations Machine: The 1953 Bundestag Election 143 6. The Triumph of the Economic Miracle: The CDU/CSU and the 1957 Bundestag Election 205 7. Conclusion 256 Bibliography 262 Index 277 This open access edition has been made available under a CC BY-NC-ND 4.0 license thanks to the support of Knowledge Unlatched. Not for resale. This open access edition has been made available under a CC BY-NC-ND 4.0 license thanks to the support of Knowledge Unlatched. Not for resale. L IST OF I LLUSTRATIONS Illustration 2.1: At the crossroads of the economy 67 Illustration 2.2: This is what our economic policy provides you 68 Illustration 2.3: The savior: CDU 70 Illustration 2.4: The success of the CDU 75 Illustration 2.5: It should get even better! 76 Illustration 2.6: The success of the CDU 78 Illustration 2.7: The success of the CDU 79 Illustration 2.8: With Professor Erhard into the abyss! 85 Illustration 4.1: How quickly people forget (a) 129 Illustration 4.2: How quickly people forget (b) 131 Illustration 4.3: Ask the women 133 Illustration 4.4: The German “miracle” 134 Illustration 4.5: The main thing is that we talk together! 137 Illustration 5.1: Snapshots out of a German diary (a) 167 Illustration 5.2: Snapshots out of a German diary (b) 168 Illustration 5.3: All of roads of Marxism lead to Moscow 172 Illustration 5.4: The CDU has said for years: 174 Illustration 5.5: Conversations on the left 176 Illustration 5.6: Prosperity from one’s own efforts 180 Illustration 5.7: Would we earn more if . . . 182 Illustration 5.8: The people have the last word 184 Illustration 5.9: We women have forgotten nothing, and furthermore have learned a thing or two 186 Illustration 6.1: Men around Adenauer: Professor Ludwig Erhard 218 Illustration 6.2: Men beside Adenauer: Professor Ludwig Erhard 221 Illustration 6.3: Posters from the 1957 Bundestag election campaign* 223 Illustration 6.4: The clothing closet attests: It’s going better for all of us! 225 Illustration 6.5: The paycheck attests: It’s going better for all of us! 226 Illustration 6.6: The shopping bag attests: It’s going better for all of us! 227 This open access edition has been made available under a CC BY-NC-ND 4.0 license thanks to the support of Knowledge Unlatched. Not for resale. Illustration 6.7: Everyone has a part of it! 232 Illustration 6.8: When one is not blind . . . 233 Illustration 6.9: A new life obtained! 234 Illustration 6.10: A shortage in the budget 244 Illustration 6.11: We have accomplished a lot! 245 *This image is not available in the open access edition due to rights restrictions. It is accessible in the print edition on page 223. x | List of Illustrations This open access edition has been made available under a CC BY-NC-ND 4.0 license thanks to the support of Knowledge Unlatched. Not for resale. A CKNOWLEDGMENTS During the winter of 1993/94 I was teaching E nglish to business students at a technical school in the comfortable Westphalian city of Münster. Wanting to get a first-hand glimpse of conditions in the former German Democratic Republic, I traveled to the East in late December 1993. Standing in line at Dresden’s Sem- per O pera H ouse, I had the good for tune to strike up a conv ersation with a young couple from Jena in Thuringia. Having never spent time with an Ameri- can, they were kind enough to invite me back to their home. Conditions in their industrial city presented a striking contrast to the affluence of Münster . Jena con- sisted of grim, dilapidated apar tments, stor es, and factories, all them thickly blanketed in coal soot.The frustrations of many East Germans regarding the lack of economic and social pr ogress since r eunification were aptly summed up b y some graffiti scrawled on the wall of a r ow house: “Kohl lied!” The wife of this couple was educated as a doctor and her husband as a mechanical engineer, yet both of them were unemployed and squatting in an apartment house that lacked indoor running water. In these difficult circumstances, they spoke nostalgically of the days of the former East Germany, when the street cars were virtually free and they had enjoyed a sense of social security. The pair was leery of the free market’s intrusion into their liv es and definitely could not per ceive any of its potential benefits. Spending time with this couple made me realize how difficult a task it would be to tie the two G erman states together. It was not mer ely a matter of r econ- structing the infrastructure, as many in the West thought, but also of changing people’s minds. Now, almost twenty years later, the “wall in the mind” remains a formidable obstacle. Meeting this couple led me to wonder what transpired dur- ing the early Federal Republic in terms of West Germans’ changing perceptions and meanings regarding the economy. To be sure, West Germany experienced an “economic miracle” of the 1950s that transformed society and undermined Social D emocratic calls for the socialization and planning of the economy Although after the Third Reich many West Germans were sharply critical of in- dustry and free-market capitalism, within a fe w years most had become fiercely proud of their “ social mar ket economy.” Clearly the conser vative Christian Democratic Union and L udwig Erhard, the F ederal Republic’s first economics This open access edition has been made available under a CC BY-NC-ND 4.0 license thanks to the support of Knowledge Unlatched. Not for resale. minister, had successfully positioned themselv es as the bear ers of the economic miracle—but, I wonder ed, just ho w they succeeded in doing this? And mor e importantly perhaps, what did this economic reconstruction mean to West Ger- mans in the midst of building a ne w democracy out of the ruins of the Nazi past? So many people have contributed in a variety of important ways to the com- pletion of this work that I find it impossible to thank them all sufficiently . I could not imagine a better P h.D. adviser than Alan D. B eyerchen, who o versaw the beginning stages of this pr oject at O hio State University. He always found the right balance betw een guiding me in a pr oductive way and encouraging me to find my own intellectual path. I am deeply grateful to him for his guidance, sup- port, and friendship. I must thank the members of my disser tation committee, John Rothney and Leila Rupp, for their astute insights and helpful advice. K en Andrien, James Bartholomew, Carole Fink, Martha Garland, and Robin Judd, all at Ohio State, contributed immeasurably to my gr owth and dev elopment as a historian. I also benefited gr eatly from scholars who shar ed their insights as I wrestled with some of the fundamental issues of postwar West German history. Diethelm Prowe and Volker Berghahn were kind enough to r ead early drafts of the manuscript and pr ovide invaluable suggestions to str engthen my analysis. I am very grateful to R obert Moeller for his ex cellent critique of a section of my manuscript dealing with the r epresentation of gender r oles in political pr opa- ganda. Thomas Schwartz’s commentary on a confer ence paper presented at the 2003 meeting of the German Studies Association helped sharpen my thinking on the process of the Americanization of West German politics. Conversations with Julia Sneeringer and others at the 2000 M idwest German History Seminar at the University of Wisconsin helped me significantly in considering advertising’s role in German political history. I appreciate the extensive time and care James C. Van Hook devoted to reviewing this manuscript. H is constructive critique substan- tially str engthened this wor k. M arion B erghahn, M elissa S pinelli, and J aime Taber at Berghahn Books provided extraordinary support in the pr oduction of this volume. I greatly appreciate their work in guiding this book to publication. I am also grateful for the gener ous support I received from the Department of History, Graduate School, and O ffice of I nternational Education, all of O hio State University, and from the Fulbright Commission. Their assistance allowed me to complete essential archival research in Germany. During my year as a Ful- bright scholar at the University of Cologne, I was fortunate to have Professor Jost Dülffer as my “Betreuer.” Our conversations helped keep this pr oject on track through the trying times of archival research. Dr. Sabine Behrenbeck at the Uni- versity of Cologne was kind enough to giv e me a great deal of her time and atten- tion as I str uggled to find a focus for my pr oject. A t the Ar chiv für Christlich-Demokratische Politik, Dr. Frank Mueller and H ans-Jürgen Klegraf assisted me greatly as I searched the CDU records. Andreas Schirmer at the Lud- wig Erhard Stiftung also provided me with considerable help during my r esearch. Dr. D irk Schindelbeck, who spent an entir e day with me at the K ultur und Werbe geschichtliches Ar chiv in F reiburg, substantially expanded my under- xii | Acknowledgments This open access edition has been made available under a CC BY-NC-ND 4.0 license thanks to the support of Knowledge Unlatched. Not for resale. standing of public relations and advertising work in West Germany. The support staffs of the Bundesarchiv in Koblenz, Archiv der sozialen Demokratie in Bonn, the Nordrhein-Westfälisches Hauptstaatsarchiv in Düsseldorf, Archiv des Liber- alismus in G ummersbach, the K onrad A denauer H aus in Königswinter , Rheinisch-Westfälisches Wirtschaft Ar chiv in Cologne, and the H ans S eidel Stiftung in Munich extended considerable assistance to my r esearch. I am most grateful to all of them. During my stay in Germany I was fortunate to have close friends who offered a haven from the grind of disser tation work. Kristina, Tibor, and Martin Sugár provided me with the atmosphere and comfort of a home-away-from-home and occasional tickets to Borrusia Dortmund soccer matches. Helga and Beno Strass- er have been dear family friends and assisted me immeasurably during my stays in Germany. Kelly Meyer and Cassandra Bonse were always willing to lend an ear as I vented dissertation excitement and frustrations. My graduate school friends and colleagues, Amy Alrich, Brad Austin, Michael Bryant, Laura Hilton, Jeffrey Lewis, Andrew Long, K elly McFall, Doug Palmer, John Stapleton, John Stark, and Nick Steneck, always exercised a critical eye and a delicate touch in pointing out the strengths and weaknesses in my work. At Shippensburg University I have been blessed with many supportive colleagues. As chairperson of the D epartment of History and Philosophy, David Godshalk extended both encouragement and sound advice as this project developed. I am deeply indebted to Charles Loucks, who spent countless hours reading my manuscript and managed to significantly improve my sometimes clunky writing style.The University Research and Schol- arship Program at S hippensburg University pr ovided gener ous suppor t that proved essential for the completion of the manuscript. I am grateful to G ay Jones, D iane Kalathas, M ary M owery, and Teresa S trayer at the univ ersity’s Lehman Memorial Library who indefatigably tracked down many obscure books and periodicals as I worked through my research. My family and friends hav e given me mor e support than I could ev er have hoped for. My parents were always extremely supportive of me during my jour- ney through graduate school and into the r ealm of the pr ofessional historian. Over thirty years ago, my grandfather H omer Newell ignited a lo ve of histor y within me that I carry still. My greatest debt, admiration, and love go to my wife Susan, without whose lo ve and suppor t this book would nev er have seen com- pletion. Susan was always confident that I would complete this v olume, even when I experienced doubts. Over the course of this project, we have experienced many wonderful life changes—most importantly our marriage and the births of our daughters, M argaret and N atalie. As I often times allo wed writing and research to unduly div ert my time and energy , S usan took on an immense amount of hard work. All the while she maintained her characteristic gr eat wit and upbeat attitude. I could nev er begin to fully r epay her for all she has done. However, with this project completed, I plan now to try. Acknowledgments | xiii This open access edition has been made available under a CC BY-NC-ND 4.0 license thanks to the support of Knowledge Unlatched. Not for resale. This open access edition has been made available under a CC BY-NC-ND 4.0 license thanks to the support of Knowledge Unlatched. Not for resale. L IST OF A CRONYMS ACDP Archiv für Christlich-Demokratische Politik ADK Arbeitsgemeinschaft demokratischen Kreise AdsD Achiv der sozialen Demokratie, Bonn ASM Aktionsgemeinschaft Soziale Marktwirtschaft BA Bundesarchiv BDA Bundesvereinigung Deutscher Arbeitgeberverbände BDI Bundesverband der Deutschen Industrie BKU Bund der Katholischer Unternehmer CDU Christlich Demokratische Union CSU Christlich Soziale Union DGB Deutsche Gewerkschaftsbund DI Deutsches Industrieinstitut DIVO Deutsches Institut für Volksumfragen DP Deutsche Partei DM Deutsche Mark EDC European Defense Community EMNID Ermittlungen, Meinungen, Nachrichten, Information, Dienste EPU European Payments Union FDP Freie Demokratische Partei GB/BHE Gesamtdeutscher Block/Bund der Heimatvertriebenen und Entrechteten GfG Gesellschaft für Gemeinschaftswerbung IHK Industrie- und Handelskammer KPD Kommunistische Partei Deutschlands LES Ludwig Erhard Stiftung NATO North Atlantic Treaty Organization NWHStA Nordrhein-Westfälisches Hauptstaatsarchiv, Düsseldorf OMGUS Office of Military Government, United States RM Reichsmark RWWA Rheinisch-Westfälisches Wirtschaftsarchiv SD Sicherheitsdienst SED Sozialistische Einheitspartei Deutschlands This open access edition has been made available under a CC BY-NC-ND 4.0 license thanks to the support of Knowledge Unlatched. Not for resale. SPD Sozialdemokratische Partei Deutschlands StBKAH Stiftung-Bundeskanzler Adenauerhaus Wipog Wirtschaftspolitische Gesellschaft von 1947 ZAW Zentralamt für Wirtschaft xvi | List of Acronyms This open access edition has been made available under a CC BY-NC-ND 4.0 license thanks to the support of Knowledge Unlatched. Not for resale. I NTRODUCTION If we are successful in changing the economic attitude of the population b y psychological means, then these psychological changes will themselves become an economic reality, and so serve the same purposes as other measures of economic policy taken so far. Ludwig Erhard, 19 October 1955 1 Die Geschichte der Bundesrepublik ist vor allem ihre Wirtschaftsgeschichte . (The history of the Federal Republic is above all its economic history.) Werner Abelshauser 2 I n the aftermath of the Second World War, Germany appeared destined to be a pauper among European nations. Its cities, factories, and transpor tation system had suffered massive damage during the war. It had lost its so vereignty and was subject to the r ule of the four occupying po wers of the U nited S tates, G reat Britain, France, and the S oviet Union who were not keen on r ebuilding the in- dustrial might of a defeated Germany. During the immediate postwar years many Germans scraped to get b y, enduring dreadful housing and relying on the black market to supplement the sustenance pr ovided by their ration cards. But begin- ning with the 20 June 1948 currency reform, in which the new Deutsche Mark (DM) replaced the worthless Reichsmark (RM) in the three western zones of oc- cupation, consumer goods seemed to appear magically fr om no where in shop windows. Subsequently, West Germany experienced fantastic economic gr owth through the 1960s in what has been called the Wirtschaftswunder (economic mir- acle). With rising demand for goods spurr ed on by the Korean War, West Ger- many saw its GNP increase by 67 percent in real terms between 1948 and 1952. From 1952 to 1958 the West German GNP continued to expand at a yearly rate of 7.6 percent in real terms and at a still r obust rate of about 5 per cent into the 1960s, a figure in line with the average growth of other European nations. 3 Work- ers’ wages increased by 79 percent in real terms between 1949 and 1959. 4 West Notes for this section begin on page 21. This open access edition has been made available under a CC BY-NC-ND 4.0 license thanks to the support of Knowledge Unlatched. Not for resale. Germany literally rose from the ashes as its cities and factories w ere rebuilt, ex- ports soared, and the West Germans’ standard of living improved. Politicians, economists, and historians have inextricably linked the story of West Germany’s economic reconstruction to the nation’s economic system, the Soziale Marktwirtschaft (social market economy). Emerging out of the ideas of neoliberal economists from the first half of the tw entieth century, the social mar ket econ- omy forged a “middle way” between pure laissez-faire capitalism and the collec- tivist planned economy. The system sought to free up economic controls, such as price or wage controls, and allow the individual pursuit of self-inter est and self- determination within the competition of the fr ee market. At the same time, the government would regulate the market by establishing the “rules of the game” in order to curb monopolies and car tels and av oid the concentration of ex cessive economic power in the hands of a fe w. By containing the power of large capital to set prices unfairly , the system incr eased the po wer of individual consumers within the economy. But this economic theory had to be implemented within the harsh realities of the political world. I t had to be transformed into an effectiv e po- litical tool. Leaders of the conser vative Christian D emocratic Union/Christian Social Union (CDU/CSU), most notably Konrad Adenauer, recognized the po- litical usefulness of such a pr ogram and in the late 1940s pushed their par ty to adopt the social market economy as the basis of the par ty’s economic platform. In addition, the supporters of the social market economy from a more academic and commercial background, such as Ludwig Erhard, the Federal Republic’s economics minister in the 1950s, attributed West Germany’s economic resurgence, charac- terized by the rise in productivity, exports, wages, and living standards, to the intro- duction of the economic system they espoused. 5 The social market economy was transformed from an economic theory, or even abstract economic policy, into the basis of a political party’s propaganda and public image—and, in part because of the CDU/CSU’s efforts, into an important element in the West German identity. Erhard, Adenauer, and the CDU/CSU identified the start of the social market economy with the June 1948 introduction of the Deutsche Mark throughout the three western zones of Germany and West Berlin and the simultaneous lifting of economic controls in the so-called B izone of the American and B ritish zones of occupation. Almost immediately after its implementation, the currency reform achieved mythical status among West Germans, who tell stories of food and goods appearing almost magically within shop windows as the new hard currency ended hoarding and the black market ceased to be the center of daily commer ce for West Germans. Many obser vers have likened West Germany’s reconstruction in the 1950s to a “phoenix rising out of the ashes ” after its nearly total destruction. Some elevate the Federal Republic’s economic miracle to legendary status; their hero is Ludwig Erhard. 6 Revered as the father of the economic miracle, E rhard boldly predicted in the darkest hours of West Germany’s economic despair that the na- tion would recover. Always pictured in newspapers and magazines with his self- assured smile and a cigar in his mouth, E rhard became a hugely popular icon within West Germany. He would often proclaim that West Germany’s economic 2 | Selling the Economic Miracle This open access edition has been made available under a CC BY-NC-ND 4.0 license thanks to the support of Knowledge Unlatched. Not for resale.