4 - Marshall Plan and Currency Reform

Summary

This essay describes the double relationship between the Marshall Plan and the West German currency and economic reform of June 1948. Conventional wisdom still maintains that the Marshall Plan was an important condition for the success of the currency reform, which in itself was the starting point of the West German growth story. Even before the currency reform was implemented, the German public viewed foreign credits as an indispensable prerequisite. Therefore all parties placed very high hopes in the Marshall Plan, hopes that almost necessarily were disappointed in part. Arguing from the evidence of such disappointment, Werner Abelshauser has recently repeated his opinion that the direct contribution of the Marshall Plan to economic development in West Germany was relatively insignificant. Moreover, he also questions the importance of the currency and economic reform for the economic recovery. This essay, however, advances a contrary view.

There apparently existed no single, unidirectional causal relationship between the Marshall Plan and the success of the currency and economic reform as well as the high growth rates of the West German economy after the middle of 1948. Rather, one can detect a causality the other way round, between the currency and economic reform and the success of the Marshall Plan in creating the framework for multilateral trade and payments.