The physical infrastructure was almost entirely gone: telephone, radio, paved roads, bridges, railways, water supply, sewage systems, etc., functioned only sporadically in a few places. The food supply was devastated: some Germans actually starved to death.
The population was utterly traumatized: although the term ‘PTSD’ wasn’t invented until decades later, it would have accurately applied. German civilians had died in air raids, German Jews had died in concentration camps, and German young men had died on battlefields.
Germany needed to rebuild, but it also needed leaders who were untainted. It looked for gifted and qualified individuals who had not been a part of the National Socialist regime. The word ‘Nazi’ means ‘National Socialist’ and encapsulates Hitler’s political ideology.
Individuals who had resisted Hitler’s National Socialism were sought and found to lead the new postwar Germany. Konrad Adenauer became the country’s first chancellor, and Theodor Heuss was vice chancellor.
Perhaps the greatest and most brilliant postwar leader in Germany was Ludwig Erhard, who courageously defied the National Socialists, as Charles Moritz’s Current Biography Yearbook notes:
In 1944 Erhard, forseeing the collapse of the Nazi regime, formulated an elaborate plan for the economic rebuilding of postwar Germany on liberal principles. The program was based on the premise — considered treasonable in the eyes of the Nazis — that Germany would be totally defeated in the war. Erhard sent copies of this document to several trusted friends, including Dr. Carl Friedrich Goerdeler, a former mayor of Leipzig. Goerdeler, who was later executed for his role as a leader in the anti-Hitler plot of July 20, 1944, had slated Erhard for a Cabinet post in his projected post-Nazi government. Fortunately for Erhard, the Nazi authorities neer saw his incriminating economic plan.
Ludwig Erhard represented the opposite of Hitler’s National Socialism. Where the Nazis wanted high taxes, Erhard lowered them, after he became Bundesminister für Wirtschaft — Federal Minister for Economics — in September 1949.
Where Hitler demanded that the central government control wages and dictate retail prices, Erhard created a market economy, in which customers and businesses were free to set prices, negotiate, and make mutual compromises to establish prices and wages beneficial to both sides.
The Nazis had demanded government ownership of certain economic sectors. Ludwig Erhard released those sectors so that individuals and groups could own their own small businesses, or own shares of larger companies.
The result of Erhard’s work was an amazing economic rebound. Many observers had guessed that Germany would be perpetually downgraded to the status of a third world country. Instead, the nation experienced the Wirtschaftswunder — the economic miracle. Standards of living and income levels rose for all citizens, and especially for those at the bottom of the wage scale.
Within less than a decade, Germany went from being the weakest economy in Europe to being the strongest. It soon became the second strongest industrial power in the world. Ludwig Erhard deserves credit for much of this advancement.
Erhard’s insistence that ordinary individuals in the lower and middle classes be able to own and operate their own small businesses, and be able to purchase shares of larger companies, gave significant opportunities to German workers. He undid the Nazi policy that decreed that certain industrial sectors must be owned by the government.
Not only did this privatization create chances for ordinary people, but it also improved the efficiency and quality of industrial manufacturing. Historian Germa Bel writes that the word ‘privatization’ itself was created to describe Erhard’s policies and their implementation:
The Oxford English Dictionary (second edition, 1989, volume XII, p. 521) suggests that the earliest written record of the word “privatization” in English occurred in 1959. On July 28, the British newspaper News Chronicle reported: “Erhard selected the rich Preussag mining concern for his first experiment in privatisation.” Ludwig Erhard was at that time Vice-Chancellor and Minister for Economic Affairs of the German Federal Republic. However, the compilations of Erhard’s writings and speeches around this time do not include the word “privatization” (Erhard, 1958, 1963). The OED (volume XIII, p. 666) also suggests that “reprivatize” was used in 1959. The April 4, 1959, issue of The Economist gave information about the first sale of state-owned shares of the Preussische Bergwerks- und Hütten AG, commenting: “A whole series of political and legal hurdles will have to be taken before the way is clear to denationalize, or reprivatise, in earnest” (CXCI, 6032, p. 53).
There were certainly other thinkers who contributed to Germany’s Wirtschaftswunder: in addition to Adenauer and Heuss, American economists like Walter Heller and Lewis H. Brown, and American officials like George Marshall and Lucius D. Clay played a role in the reconstruction of Germany.
Without Erhard, generations of people would have been subjected to misery and poverty. The brilliant economy of Germany in the second half of the twentieth century would have been impossible without the policies and actions of Ludwig Erhard.