Currency reform

Ludwig Erhard (CDU) was Minister of Economics during Konrad Adenauer’s term in office (1949–1963). His name is linked to the introduction of the Deutschmark (D-Mark) in 1948 (called the “currency reform”). Erhard is regarded as the father of the social market economy.

In 1948 the Deutschmark replaced the old “Reichsmark” as the currency in West Germany. Ludwig Erhard virtually single-handedly also revoked price fixing for most goods. Where previously the state had determined the price of certain products, from then on prices were regulated by supply and demand.

Social market economy and economic miracle

Ludwig Erhard was an early advocate of a liberal, social economic order, both during his time as Minister of Economics and prior to that as Professor of Economics. In West Germany that led to an unbroken period of economic growth that lasted around one and a half decades.

Germany became one of the world’s leading industrial and export nations. It is because of this that Erhard is regarded as the author of Germany’s post-war “economic miracle”.

The optimism of the “man with the cigar” was infectious. His motto – “prosperity for all” – became a reality for millions of Germans after the dark years of Hitler tyranny and hardship. For many years Ludwig Erhard was the most popular politician in West Germany.

Foreign policy

In terms of foreign policy, Chancellor Erhard attached particular importance to relations with the United States and Israel. He also began slowly opening up to the East by establishing trade missions in Poland, Romania, Hungary and Bulgaria.

After 14 years as Minister of Economics, Erhard was Federal Chancellor for only three years. Disagreements over economic and fiscal policy issues in 1966 led to the end of the CDU/CSU/FDP coalition government.