The first phase of Marshall Plan funding helped West Germany reform its currency and start a surprisingly rapid economic and political revival. Integral to the Marshall Plan was the Truman administration’s elimination of German debt and reparations. As a result, real output grew by 18.5 percent in 1948 and averaged 8 percent a year in the first half of the 1950s.
Above is David L. A quote from Rolle, “The 11-Minute Harvard Lecture That Reshaped Postwar Europe,” The Wall Street JournalSaturday/Sunday, June 4-5, 2022. It is based on Rolle’s book of titles George Marshall: Defender of the Republic.
Rolle missed most of the reasons for the German recovery and economic expansion. It was not the Marshall Plan, as Tyler Cowen pointed out in his 1985 book chapter titled “The Marshall Plan: Myths and Realities” and in a 1986 article based on that chapter. because. The latter is titled “The Great Twentieth-Century Foreign-Aid Hoax,” becauseApril 1986.
So what has been known as the German economic miracle? I tell the story in some detail in “The German Economic Miracle,” in David R. Henderson, ed. Concise Encyclopedia of EconomicsLiberty Fund, 2008.
Short version: monetary reform, ending price controls, and significantly lowering marginal income tax rates.
The image above is of the man who deserves more credit than anyone else for the German economic miracle: Ludwig Erhard.