In a new INET’s book with Cambridge University Press, renowned German economic historian Carl-Ludwig Holtfrerich uncovers the startling truth behind German currency reform usually hailed as the foundation of the post-war German economic miracle: Ludwig Erhard, who cooperated with the Nazis, unjustly claimed the spotlight, overshadowing the real architect, Edward Tenenbaum.
Lynn Paramore of INET
interviews Carl-Ludwig Holtfrerich about the book. This bit is super interesting:
LP: Can you say a little about the players in the currency reform? Who is on board and who is not on board?
CH: Well, one clause of the 1945 Potsdam Agreement of the victorious powers (France was not invited) was that the Soviet Union, the United States, and Britain would govern Germany as an economic unit. That meant that there should be – with France – a four-power currency reform. The Allied Control Council, responsible for governing Germany, consisted of representatives from the four Allied powers and planned to implement a currency reform for all of Germany.
In September 1946, the French opposed the currency reform plan put forth by the American military government to the Allied Control Council. They feared a unified Germany, which could emerge as a much stronger economic power in Europe and overshadow French influence. So they voted against all kinds of measures that would treat Germany as a single economic unit. Ultimately, from 1947 until the implementation of currency reform in West Germany in June 1948, the Soviets refused to support a common currency reform for all four occupation zones.
The Soviet military government in Berlin, represented in the Allied Control Council, often reached agreements with the Western powers. However, Moscow would later intervene and express discontent with these arrangements. Moscow wanted to have a hand in the economic power of Western zones. So they had an interest in a common currency reform, but they wanted to have it their way and not according to the American plan.
The American reform plan was called the Colm-Dodge-Goldsmith (CDG)-Plan. Joseph Dodge was Director of the Finance Division of the American military government in Berlin and later president of the American Bankers Association. The other two, Gerhard Colm and Raymond Goldsmith, were Jewish Germans who had emigrated to the United States early on in 1933 and 1934. They were eminent economists, and they had been asked by the American government to develop the CDG plan for a currency reform in Germany. And at first, the Soviets went along and it was the French that didn’t.
In any case, the CDG plan finally also played a role in Edward Tenenbaum’s reform because it had to be adapted from a four-power currency reform to a three-power currency reform in West Germany only. All the data on population, money supply, and so on had to be recalculated. This was what Tenenbaum did.
Actually, the other two powers, the French and the British, had currency experts in their military governments, too. But it was Tenenbaum who was accepted by everybody as the leading person after the decision had been taken in March 1948 that there would be a currency reform in West Germany only instead of a four-power currency reform.
In April 1948, Tenenbaum effectively imprisoned 11 West German currency experts with support staff for seven weeks in barracks on an American airfield near Kassel. They were completely cut off from their families, from the rest of Germany. In total secrecy, they aided Tenenbaum in adjusting his currency reform plan to German language and conditions.
The main reason for secrecy was that the Soviets should not get a clue that this was happening. The fear was that if the Soviets learned of the planning, they would implement a currency reform in their Eastern Zone first. This would harm the Western Zones, as old Hitler currency would flow into their area, where it would still be legal tender. This would increase the amount of money that a Western currency reform would have to deal with. Therefore, the Western powers wanted to be the first movers and dump a flood of old money on the Soviet zone instead.
How hate and brainwashed society takes so much time to recover:
P: Your book restores Tenenbaum’s legacy as the true father of the Deutsche Mark. Why is it essential to correct the historical record? Did anti-Semitism contribute to the oversight of Tenenbaum’s achievements?
CH: I think it did play an important role. During the 12 years of their reign and even before during the Weimar Republic, the Nazis had indoctrinated the German population that the Jews were the root of all German problems. And many people came to believe it. You don’t get that out of brainwashed minds within three years after the end of Nazi rule. It takes at least a generation, i.e. 30 years. I think that the fact that Tenenbaum was Jewish played the main role in suppressing his merit and preventing his appearance in German history. I hope this book contributes to changing that.
There are hundreds of streets and bridges, squares and places as well as buildings and schools named after Ludwig Erhard in Germany. But there is only one street — and only since about 15 years — which is named after Edward A. Tenenbaum.
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