Ludwig Erhard Quotes (1897-1977)

“Any liberal system must proceed from the assumption that freedom is one and indivisible and that elementary human freedom in all spheres of life must go hand in hand with political, religious, economic and spiritual freedom. The strategy of collectivist thinking has always been to split up this most essential and most universal of human values as a means of making inroads into the free system itself.”

“Erhard was a man who had his moment in history and grasped it. As head of the Economic Department of the administration which preceded the creation of the Federal Republic of Germany, he was the author of the decision to combine the currency reform of 1948 with the abolition of rationing, and of restrictive regulations concerning production, distribution and capital movements. Many have argued that Germany’s ‘economic miracle’ (and not less the political miracle) owes much to these decisions which at the time were regarded as either unrealistic or indefensible by many, including the Occupation Powers.”

“It seemed a miracle when West Germany—a defeated and devastated country—became one of the strongest economies on the continent of Europe in less than a decade. It was the miracle of a free market. Ludwig Erhard, an economist, was the German Minister of Economics. On Sunday, the twentieth of June, 1948, he simultaneously introduced a new currency, today's Deutsche Mark, and abolished almost all controls on wages and prices. He acted on a Sunday, he was fond of saying, because the offices of the French, American, and British occupation authorities were closed that day. Given their favorable attitudes towards controls, he was sure that if he had acted when the offices were open, the occupation authorities would have countermanded his orders. His measures worked like a charm. Within days the shops were full of goods. Within months the German economy was humming away.”

“Thomas Hazlett: Do you have any examples in mind of countries that, once having flirted with socialism or the welfare state, have been able to reinstitute the rule of law? Friedrich Hayek: Oh, very clearly Germany after World War II, although in that case it was really the achievement of a single man, almost. Hazlett: Ludwig Erhard? Hayek: Ludwig Erhard, yes.”

“May I tell you the story of when I last spoke to Dr Ludwig Erhard? We were alone for a moment and he turned to me and said, “I hope you don't misunderstand me when I speak of a social market economy (sozialen Marktwirtschaft). I mean by that that the market economy as such is social, not that it needs to be made social.””

“Heartiest congratulations on your great victory. I look forward to an early chance to meet with you again and to discuss our great common tasks in working for the peace of Europe, the reunion of Germany, and the steady growth of the Atlantic community.”

“In January 1947, the US and Britain established a common economic policy for their zones. France joined the following year, making it the ‘Trizone’. The economist Ludwig Erhard was appointed as director of the Economic Council and oversaw the smooth transition to the new currency, the Deutschmark. He coupled it with eliminating both price controls and rationing. Erhard’s bold economic policy inspired a recovery that eventually enabled political reconstruction based on a constitution approved by the Allied Powers.”

“Like everyone else, I was familiar with Erhard's heavy bulk, and I knew his reputation for stubbornness. But when I met him, I found that he was subtle and highly intelligent – although we did not always agree. The prestige he enjoyed was well deserved: he had shown clear-sighted courage in successfully imposing and carrying out his ideas. He had no reason to doubt the superiority of the so-called ‘liberal’ economic policies that had worked so well in his own country. He was no nationalist, but the Schuman Plan had no place in his vision of an international economy based on pure free trade. Where we were proposing a code of good conduct, he scented the danger of dirigisme; where we were organizing European solidarity, he suspected protectionism.”

“What Erhard said was breath-taking in its simplicity. Provided the state defends the currency, he said, there is no need to control prices, wages, goods, capital or anything else. In fact, so long as these controls remain, we shall continue to suffer from both inflation and scarcity. Abolish the lot and all will come right. The miracle was that he got away with being allowed to do it. ... In the early stages of his policy, Erhard was surrounded by capitalists and unionists, economists and bankers, crying “Woe, woe” and warning of the dire and imminent consequences of removing what they imagined were the foundations on which the fabric of things rested. As he used to say, “My room resounds with catastrophe from morn to night.” But he was right, and they were wrong: the new mark stayed rock hard and Germany in a decade was contemplating the economies of her victors with patronising contempt.”

“In West Germany and here in Berlin, there took place an economic miracle, the Wirtschaftswunder [Miracle on the Rhine]. Adenauer, Erhard, Reuter, and other leaders understood the practical importance of liberty -- that just as truth can flourish only when the journalist is given freedom of speech, so prosperity can come about only when the farmer and businessman enjoy economic freedom. The German leaders -- the German leaders reduced tariffs, expanded free trade, lowered taxes. From 1950 to 1960 alone, the standard of living in West Germany and Berlin doubled.”

“Ludwig Erhard had by this time [1975] retired from any involvement in active politics, but apparently he had heard that my politics (and economics) were sufficiently different (that is to say similar to his own) to make a discussion appealing. I was glad to discover that the former Chancellor, as well as being the architect of German prosperity, had a considerable presence and shrewdness. He asked me a number of searching questions about my economic approach, at the end of which he seemed satisfied. I felt I had performed well in an important tutorial.”