How does war negatively affect the economy?

Economic miracle

The dream of the good life

A new decade begins: The 1950s go down in the history of the Federal Republic of Germany as the decade of the economic miracle, which only ended with the mining crisis in the early 1960s.

The course was set by Ludwig Erhard, pioneer of the currency reform and first Minister of Economics in the Federal Republic. "Social market economy" is the name of the new economic order. "Prosperity for all" - so the slogan of the CDU before the federal elections in 1957 - should bring this economic form. Everyone who achieves something should also be able to afford something.

The promotion of industry is at the beginning of the economic upswing. The mining and steel industry are established as the basis and energy suppliers, later mechanical engineering, chemicals and the electrical industry gain in importance.

However, the production of consumer goods for private use did not play a major role in the first half of the 1950s. Wages also grew only slowly in the early 1950s, and company profits were used for further expansion.

The fact that the Federal Republic is recovering so quickly from the aftermath of the war is primarily thanks to the support of the Western allies. In the Cold War, they need a strong ally at the interface between the blocs. Instead of accepting further dismantling, the Federal Republic of Germany is benefiting from the "Marshall Plan", the United States' reconstruction aid for the war-torn European countries.

full employment

In the years 1950 to 1963, industrial production increased by 185 percent in real terms. There is a sufficient workforce, and the numerous displaced persons and refugees can be used well in building up the economy.

However, women who worked in many areas of the economy at the end of the war and in the first few years afterwards are sent back home. The men are back from the war. The Adenauer government's image of women and families only allows women to work until they marry.

At the end of the 1950s there was even a shortage of workers. Entrepreneurs are starting to hire foreign workers. The first recruitment agreement with Italy was signed in 1955, followed by other Mediterranean countries from 1960: Portugal, Spain, Greece and Turkey.

The word "guest workers" arises because the recruitment does not provide for the workers brought into the country to stay permanently. In 1964, the millionth guest worker is welcomed at Cologne Central Station. Mostly they work as unskilled workers in factories and construction, later mainly in mining, even if they had learned other trades at home.

"Made in Germany"

The VW Beetle becomes a symbol of the economic miracle. The millionth exemplar rolled off the production line as a gold-plated special model at the Wolfsburg plant in 1955.

The electrical sector is also booming: washing machines, refrigerators, televisions and radios are bestsellers. Companies like Krupp, which had fallen into disrepute due to armaments production in World War II, were badly destroyed by bombs and dismantled after the end of the war, recovered in the 1950s.

Locomotives, industrial plants, machines and engines are sold all over the world. As an industrial location, the Federal Republic of Germany attracts many investors from abroad - foreign trade is flourishing. "Made in Germany" is becoming a quality feature for export goods.

Ludwig Erhard always resisted the term "economic miracle" because he saw the economic rise of the Federal Republic as a result of hard work, reconstruction efforts and - in the first few years - the renunciation of the fulfillment of personal consumption needs. Not as a miracle that came overnight.

By building up the economy, the Federal Republic is also reaping the appreciation of other countries with which relations were shattered by the war. The West Germans gain a new national pride without having been preceded by a detailed political debate about war and National Socialism.

Consumption and Prosperity

From the mid-1950s onwards, private purchasing power also increased while the cost of living stagnated. So there is more money left for consumption. Germans get into a real shopping frenzy: furniture, cars, travel, electrical appliances. Ludwig Erhard's concept of "prosperity for everyone" seems to be working.

The mass production of consumer goods is making prices cheaper for things that were previously unaffordable, such as radios, televisions and washing machines. The federal government supports the dream of a "little house in the country" with low-interest construction loans.

Everyone has a share in the growing prosperity: including the workers and - after a pension reform in 1957 - the elderly. Social security, full employment - in the 1950s the standards for a quality of life were established that are taken for granted today.

Two forms of pleasure in consumption are the "feeding wave" and the new desire to travel. While after the war it was primarily about getting full, in the 1950s many Germans chewed on "affluent bellies". Good butter, real coffee beans - lavish food is in demand.

And eating habits are gradually changing: the light-colored wheat flour, formerly reserved for cakes, is being baked more and more for bread - the Americans have shown it with their toast. Preserves and frozen foods replace the fresh vegetables from your own garden. Traveling makes you want to eat exotic food.

Travel in general: In the 1950s, vacation seems to be moving back into the realm of possibility for many German citizens. At first, the Germans mainly visit relatives, later they move to boarding houses and hostels.

At the beginning of the 1960s, one in three Germans went on vacation once a year. Even if the wanderlust is great - Italy remains a pipe dream for most. The travel destinations are still nearby: the North Sea coast, low mountain ranges such as the Sauerland, the Black Forest or Bavaria. Bus companies also offer trips for those who cannot yet afford their own car.

And car owners are discovering a new, inexpensive variant of vacation: camping. From the mid-1960s, the first travel companies regularly fly to "Mallorca - the Germanic grill in the Mediterranean" (according to the text of a television report from 1965).