Ludwig Erhard

Ludwig Erhard   (politician)
Born	Ludwig Wilhelm Erhard 1897-02-04 Fürth, Kingdom of Bavaria
Died	1977-05-05 (Age 80) Bonn, West Germany
Nationality	German
Alma mater	Goethe University
Religion	Lutheranism
Children	1
Spouse	Luise Lotter
Member of	Mont Pelerin Society
Party	Christian Democratic Union
Single Bilderberg, West German Minister for Economics for 14 years during the German "economic miracle".  Chancellor of Germany In office 16 October 1963 - 1 December 1966 Succeeded by Kurt Georg Kiesinger  Vice Chancellor of Germany In office 29 October 1957 - 15 October 1963  West Germany/Minister for Economics In office 20 September 1949 - 15 October 1963

Ludwig Wilhelm Erhard was a German politician affiliated with the Christian Democratic Union (CDU), and chancellor of West Germany from 1963 until 1966. He is known for leading the West German postwar economic reforms and economic recovery (Wirtschaftswunder, German for "economic miracle") in his role as Minister of Economic Affairs under Chancellor Konrad Adenauer from 1949 to 1963.

During that period he promoted the concept of the social market economy (soziale Marktwirtschaft), on which Germany's economic policy in the 21st century continues to be based. In his tenure as Chancellor, however, Erhard lacked support from Adenauer, who remained chairman of the party until 1966, and failed to win the public's confidence in his handling of a budget deficit and his direction of foreign policy. His popularity waned, and he resigned his chancellorship on 30 November 1966.

Erhard's credibility was damaged by the Huyn Affair.

Military service and university

Ludwig Erhard was born in Fürth in the Kingdom of Bavaria on 4 February 1897. Ludwig suffered from infantile paralysis in his third year, resulting in a deformed right foot and forcing him to wear orthopedic shoes for the remainder of his life. He was a commercial apprentice at the Georg Eisenbach textile company in Nuremberg from 1913 to 1916.

In 1916, during World War I, Erhard volunteered for the German military. He was badly wounded on his left shoulder, side and leg by an Allied artillery shell on 28 September 1918 during the Fifth Battle of Ypres. He was committed to a military hospital, where he underwent seven operations until June 1919 His left arm became permanently shorter than his right one.

Because of his injury he could no longer work as a draper and started learning economics in late 1919 at a business college in Nuremberg. He passed the school's exit examination on 22 March 1922 and received a degree in business administration. During his time at school, he developed a friendship with the economist and professor Wilhelm Rieger, to whom Erhard owed much of his liberal convictions. Thanks to Rieger's intervention, Erhard was able to enroll at the University of Frankfurt in the autumn of 1922. He received his Ph.D. from the university on 12 December 1925, for a dissertation finished in the summer of 1924 under Franz Oppenheimer.Oppenheimer's liberal socialist ideology had a heavy influence on Erhard, especially Oppenheimer's opposition to monopolies. During his time in Frankfurt he married Luise Schuster (1893–1975), a fellow economist, on 11 December 1923. They had known each other since childhood.

World War 2

During World War II he worked on concepts for a postwar peace; however, officially such studies were forbidden by the Nazis, who had declared 'total war'. As a result, Erhard lost his job in 1942, but continued to work on the subject by order of the Reichsgruppe Industrie. He wrote War Finances and Debt Consolidation (orig: Kriegsfinanzierung und Schuldenkonsolidierung) in 1944; in this study he assumed that Germany had already lost the war. He sent his thoughts to Carl Friedrich Goerdeler, a central figure in the German resistance to Nazism, who recommended Erhard to his comrades. Erhard also discussed his concept with Otto Ohlendorf, deputy secretary of state in the Reichsministerium für Wirtschaft. Ohlendorf himself spoke out for "active and courageous entrepreneurship (aktives und wagemutiges Unternehmertum)", which was intended to replace bureaucratic state planning of the economy after the war.

After the War

After the war Erhard became an economic consultant. Under the Bizone established by the American and British administration in 1947, he led the Sonderstelle Geld und Kredit ("Special Office for Money and Credit"), an expert commission preparing the currency reform in Germany's western zones of occupation. The commission began its deliberations in October 1947, and the following April produced the so-called Homburg plan, elements of which were adopted by the Allies in the currency reform that set the stage for the recovery of the economy.

In April 1948, Erhard was elected director of economics by the Bizonal Economic Council. On 20 June 1948, the Deutsche Mark was introduced. Erhard abolished the price-fixing and production controls that had been enacted by the military administration. This exceeded his authority, but he succeeded with this step.

Minister of Economic Affairs

Konrad Adenauer and Ludwig Erhard in 1956

Erhard decided, as economic director for the British and American occupation zones, to lift many price controls in 1948, despite opposition from both the social democratic opposition and Allied authorities. Erhard's financial and economic policies soon proved widely popular as the German economy made a miracle recovery to rapid growth and widespread prosperity in the 1950s, overcoming wartime destruction and successfully integrating millions of refugees from the east.

In 1949, in the first elections following the Nazi era, Erhard stood for election in a Baden-Württemberg district and was elected. He was appointed Federal Minister for Economic Affairs, a position he would hold for the next 14 years; from 1957 to 1963 he was also the vice-chancellor of Germany.

A staunch believer in economic liberalism, Erhard joined the Mont Pelerin Society in 1950, and used this influential body of liberal economic and political thinkers to test his ideas for the reorganization of the West German economy. Some of the society's members were members of the Allied High Commission and Erhard was able to make his case directly to them. The Mont Pélerin Society welcomed Erhard because this gave its members a welcome opportunity to have their ideas tested in real life.

Late in the 1950s, Erhard's ministry became involved in the struggle within the society between the European and the Anglo-American factions, and sided with the former. Erhard viewed the market itself as social and supported only a minimum of welfare legislation. However, Erhard suffered a series of decisive defeats in his effort to create a free, competitive economy in 1957; he had to compromise on such key issues as the anti-cartel legislation. Thereafter, the West German economy evolved into a conventional welfare state from the basis that had been already laid in the 1880s by Bismarck.

Erhard was also deeply critical of a bureaucratic-institutional integration of Europe on the model of the European Coal and Steel Community.

Chancellor

After the resignation of Adenauer in 1963, Erhard was elected chancellor with 279 against 180 votes in the Bundestag on 16 October.

Foreign policy

Charles de Gaulle and Ludwig Erhard (1965)

Erhard considered using money to bring about the reunification of Germany. Despite Washington's reluctance, Erhard envisaged offering Nikita Khrushchev, the leader in Moscow, massive economic aid in exchange for more political liberty in East Germany and eventually for reunification. Erhard believed that if West Germany were to offer a "loan" worth $25 billion US to the Soviet Union (which Erhard did not expect to be repaid), then the Soviet Union would permit German reunification. The acting American Secretary of State George Wildman Ball described Erhard's plan to essentially buy East Germany from the Soviet Union as "half-baked and unrealistic." Erhard's objective coincided with Khrushchev rethinking his relations with West Germany. The Soviet leader secretly encouraged Erhard to present a realistic proposal for a modus vivendi and officially accepted the Chancellor's invitation to visit Bonn. However, Khrushchev fell from power in October 1964, and nothing developed. Perhaps more importantly, the Soviet Union had received a vast series of loans from the international money markets by late 1964, and no longer felt the need for Erhard's money.

Support for the American role in the Vietnam War proved fatal for Erhard's coalition. Through his endorsement of the American goal of military victory in Vietnam, Erhard sought closer collaboration with Washington and less with Paris. Erhard's policy complicated Allied initiatives toward German unification, a dilemma that the United States placed on the back burner as it focused on Southeast Asia. Erhard failed to understand that American global interests—not Europe's needs—dictated policy in Washington, D.C., and he rejected Adenauer's policy of fostering good relations with both the United States and France in the pursuit of West German national interest. Faced with a dangerous budget deficit in the 1966–1967 recession, Erhard fell from office in part because of concessions that he made during a visit to U.S. President Lyndon B. Johnson.

Erhard's fall suggested that progress on German unification required a broader approach and a more active foreign policy. Chancellor Willy Brandt in the late 1960s abandoned the Hallstein Doctrine of previous chancellors and employed a new Ostpolitik, seeking improved relations with the Soviet Union and Eastern Europe and thereby laying the groundwork for détente and coexistence between East and West. In the 1980s Chancellor Helmut Kohl, however, reverted to Erhard's approach in collaborating with the Reagan administration in its hard-line anti-Soviet policy.

 

Event Participated in

Event	Start	End	Location(s)	Description
Bilderberg/1966	25 March 1966	27 March 1966	Germany Wiesbaden Hotel Nassauer Hof	Top of the agenda of the 15th Bilderberg in Wiesbaden, Germany, was the restructuring of NATO. Since this discussion was held, all permanent holders of the position of NATO Secretary General have attended at least one Bilderberg conference prior to their appointment.

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References

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