THE ECONOMIC RECOVERY OF WESTERN GERMANY*
The Potsdam Agreement and the subsequent partition of Germany into East and West made it certain that, as the western rump recovered from the effects of the war, her industrial and commercial structure would take on a greater and greater resemblance to that of the United Kingdom. The area east of the Oder-Neisse, representing a quarter of prewar Germany’s agricultural land, has been lost to Poland and no longer sends its surplus of food to the west. The population of Western Germany, swollen by an influx of nine million refugees, is equal to Britain’s in size and much the same in density. The two countries are alike in the slenderness of their agricultural resources, the lack of indigenous raw materials, the abundance of coal, and the wide range of traditional skills. In such circumstances, the pattern of their trade is likely to be similar also. Not only is Western Germany bound to become more heavily dependent on an exchange of manufactures for food and raw materials: the more her trade is swept by political currents away from Eastern Europe, the more strongly it must set towards markets overseas and the more Germany and Britain come into competition with one another.
It is natural, therefore, that the progress of German recovery should be watched with interest and some anxiety in the United Kingdom. This interest has been heightened because Germany has apparently pursued a widely different economic policy from Britain and because different assessments of her success in that policy have been formed.
It is possible to present two entirely different pictures of recent developments in Germany. One is a picture of weakness: of recurrent crises in the balance of payments and failure to employ a substantial proportion of available manpower. The other is a picture of strength: of uninterrupted economic expansion, with the main indices of economic activity climbing steeply and persistently for three years. Those who are impressed by the elements of weakness tend to diagnose German policy in terms of a reckless dependence on uncontrolled private enterprise. They are alarmed by a volume of unemployment and degree of social inequality which they regard as the
* From Lloyds Bank Review, October 1951, pp. 19-34.