6 - The Magnetism of Prosperity (1967–1968)

Summary

The year 1968 brought a powerful affirmation of West Germany’s uniquely stable economy and society, with ripple effects across Western and Eastern Europe. Chapter 6 opens by explaining how the Grand Coalition pursued reforms that reinforced West Germany’s commitment to price stability and economic growth. When youth protests escalated in 1967–68, driven in large part by anger over U.S. and West German policies toward Greece, Iran, and the war in Vietnam, German workers declined to join in – a stark contrast to the turmoil in neighboring France. Speculators rushed to sell French francs and buy up German marks, touching off a currency crisis. Western finance ministers converged in Bonn demanding that West Germany raise the mark’s parity value – yet Bonn refused, an unprecedented display of independence. Meanwhile, the “Prague Spring” raised hopes of West German credits for Czechoslovakia, perhaps via the Bundesbank; and German visitors poured in. When the Soviet bloc invaded, de Gaulle blamed the Bonn government for provoking it. Yet the main takeaway in Moscow was that West Germany, clearly Europe’s strongest economy, could become a significant economic partner.