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Interzonal Conference on September 11, 1946 in Frankfurt am Main: Consultation of the Secretaries of Commerce and experts of the British and American Zone, 3rd from left: Ludwig Erhard, Federal Secretary of Commerce
© ullstein bild - dpa

1945 – 1948

Ludwig Erhard shaping political economy – the beginnings

The political career of the economic specialist Erhard, who was unaffiliated with a political party, picked up quickly after the war: Just a few months after the end of World War II, he left his post as an economic consultant for his home city of Fürth, and was appointed by the American Military Government to join the Bavarian Government – led by Prime Minister Wilhelm Hoegner of the Social Democratic Party of Germany (SPD) – as State Minister for Economy in October 1945. In 1947, he was entrusted with directing the expert commission Special Office for Money and Credit, who was to consult the finance department of the British-American Bizone administration on issues of the pending currency reform. In November 1947, he was also appointed as Honorary Professor for Political Economics at the Faculty of Political Science at the University of Munich by the Bavarian State Minister of Education and Cultural Affairs.

On 2 March 1948, at the suggestion of the Free Democratic Party (FDP), Ludwig Erhard was elected Director of Economics by the Bizonal Economic Council, who put him in charge of economic policy. The Economic Council authorized him to go forward with his Law of Guiding Principles, which stipulated the deregulation of the controlled economy and prices, while introducing the new Deutsche Mark currency; this was a brave change in agenda and critical for the subsequent West German “economic miracle”. Initially, however, his economic policy was strongly disputed: The reforms led to high levels of inflation, which triggered a general strike of trade unions on 12 November 1948. His ideas were not confirmed until economic growth started at the beginning of the 1950s.