But in one further way the nation suffered. Its economy had been ravaged by the Nazi government. Meaningful work was scarce, and the threat of starvation real.
The Nazis had devastated the nation’s economy by means of their political ideology: “Nazi” means “National Socialist.”
The brutal and inhumane practices of the Nazis included high rates of taxation, government control of wages and prices, and government ownership of various businesses and industries. According to their socialist principles, they regulated nearly every transaction. Freedom to negotiate or make deals was non-existent.
The inevitable effects of these National Socialist policies included extreme scarcity of consumer goods and a thriving black market. Although it was dangerous to participate in the black market, individuals could find the freedom to negotiate and make deals there.
Many observers thought that Germany would be locked into a “third-world” status for many decades to come. The standard of living in postwar Germany was one of the lowest in the entire world.
Economically, the nation was starting over with nearly no resources. Historians called it Stunde Null - the ‘zero hour’ at which some rebirth might begin. Without material resources, this new beginning would be fueled by the visionary ideas of Ludwig Erhard.
The beginning of Germany’s amazing recovery was a set of ideas advanced by Ludwig Erhard. Within a single decade, Germany’s economy would be one of the strongest in the world.
Ludwig Erhard’s ideas centered on the idea of liberty. The National Socialists had taken away nearly every form of personal freedom, and especially economic freedom. Erhard would reverse the damage done by the Nazis. He would do that by increasing personal liberty, and especially the freedom of the individual to make economic choices.
Erhard, simply put, saw that economic recovery would come through a respect for personal freedom and through honoring the dignity of the individual and the individual’s liberty to make choices. Charles Moritz’s Current Biography reports that
On June 20, 1948, following the collapse of the West German economy, the occupation government introduced the currency reform and issued the new German mark, which aimed at increasing the purchasing power of the German wage earner. On the following day Erhard announced the removal of price controls and rationing, a move that he felt was necessary to make the full benefits of currency reform available to the people. Erhard reportedly took this step on his own initiative despite the misgivings of the American military governor, General Lucius D. Clay, and other Allied authorities. Although at first there were food shortages, accompanied by occasional disturbances, the economy soon revived. Meanwhile, Erhard kept up public morale by applying Seelenmassagen (soul massages) in the form of optimistic radio talks and newspaper articles.
Erhard’s economic leadership brought about a Wirtschaftswunder - an ‘economic miracle’ in which Germany’s exports increased by 700 percent between 1948 and 1962. Unemployed neared zero, and the national currency, worthless in 1947, was one of the world’s most stable currencies in the late 1950s.
By the time he was elected chancellor of West Germany in October 1963, Ludwig Erhard had already done his most important work during his years as Economics Minister under Chancellor Konrad Adenauer.
Possessing academic inclinations, Erhard authored several books on economics, and viewed his work less from the perspective of partisan politics and more from the perspective of a theoretical fiscal and monetary scholar.