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A visit with Chancellor Ludwig Erhard

October 3, 2019

In Fürth, a sleepy Bavarian town, the seeds were first planted for German's post-World-War-II "economic miracle." DW's Timothy Rooks has a look around the birthplace of its creator, economist Ludwig Erhard.

Former German Chancellor Ludwig Erhard
Image: AP

Ask any American who Ludwig Erhard was and you are bound to get a blank stare. Ask any German the same question and you may get a vague image of an old man chomping on a cigar. Ask anyone in Fürth, a small Bavarian town, and they will take you to his childhood home, which is now a center dedicated to his life and work — the West German minister with an economic miracle up his sleeve and later the second chancellor of West Germany.

Fürth is a small town like many others in Bavaria, though it has punched above its weight for decades. Besides Erhard, it is the home of former US Secretary of State Henry Kissinger and Grundig, a maker of consumer electronics.

Its 130,000 people enjoy a city center with stone buildings from the 19th century, some with slate siding and some half-timbered. Many are hiding more ancient histories. The city hall looks like it was airlifted out of Tuscany; the town is clean and there are flowers everywhere. Visitors may be excused for thinking they are in Disney World. 

Ludwig Erhard Zentrum - photo by Timothy A. Rooks
The newly built addition to the museum with the city hall tower in the background, copied from a palace in Florence. The sleek, modern architecture of the center would have surely appealed to Erhard, who had a taste for clean modernist linesImage: DW/T. Rooks

But this impressive example of prosperity is the perfect place to serve as the birthplace of Germany's Wirtschaftswunder, or economic miracle, since it is here that Ludwig Erhard grew up and where he formed many of his economic ideas. Put in place 70 years ago, his vision of a "social market economy" is what put Germany on its path to becoming Europe's economic powerhouse.  

The starting point

The Ludwig Erhard Center (LEZ) has now been open for just over a year and soon expects its 50,000th visitor, well over the 25,000-30,000 a year that its creators dreamed of. It aims to explain history and business in interesting ways that people actually understand and is proving a hit with school groups, history buffs and politicians.  

That a museum dedicated to the history of German economics is so successful still surprises Evi Kurz, a former TV journalist who initiated the entire project.  

"We have so many inquiries, especially for guided tours. That's why we just hired our fourth museum educator. Many people have told us that they never expected to experience such interesting things," Kurz told DW. "I remember the visit of an economics professor. She was there with her parents, well-educated people and with three children between the ages of 9 and 14. They were here for nearly four hours. There was something for all ages; parents, grandparents and children. We seem to have done something right."

Ludwig Erhard Zentrum in Fürth
Throughout the center, interactive boxes show what was going on during a certain epoch: political and social events, people's average age, what things cost, and show an example of the currency in use at the timeImage: DW/T. Rooks

The center is based partly in Erhard's former home, which also housed the family's textile business. Directly across the street is a new modern structure with more exhibition space and event rooms. 

The exhibition moves chronologically interweaving Erhard's biography with the political and economic situation of the time. It is full of high-tech interactive features, videos, listening stations and relics of Erhard's life like photos, letters, World War I memorabilia and explains how he tried but failed to save his family business during difficult times. He saw firsthand how ordinary people suffered when the economy turned upside down.

The man of the hour

At the end of World War II, Germany had suffered a traumatic defeat, was in ruins and divided among the four Allies. Any machinery in the eastern part of the country that was in working order was packed up and shipped back to the Soviet Union. Infrastructure needed to be rebuilt and jobs needed to be created. The Allies decided to ration food and put wage and price controls in place, which only led to black market activity and hoarding. As a remedy, the Americans then introduced a new German mark, which helped with stability. Workers were now getting paid in something that they could use. 

An American WWII Jeep at the Ludwig Erhard Zentrum - photo by Timothy A. Rooks
It was the Americans who allowed Erhard free reign after WWII and let him pursue a long political career, first as economy minister, then as chancellor of West GermanyImage: DW/T. Rooks

Here is where Erhard stepped in. For him this was not enough and with or without — depending on who you ask — asking Allied commanders, he scrapped the price controls overnight in June 1948. It was a risky move. Prices skyrocketed. Unrest and strikes ensued. But people stopped hoarding and shops filled up. Within months production caught up and people earned more.  

Erhard believed in this move, but he also had luck on his side. During his time as economy minister from 1949 until 1963, there was a surplus of highly qualified people with no jobs, so they worked for less. Additionally there was a huge brain drain from Russian-occupied territories to West Germany. The country's massive debts were also halved in 1953, leaving the government more room to maneuver. 

Ludwig Erhard's desk from the Bavarian economy ministry in the Ludwig Erhard Zentrum - photo by Timothy A. Rooks
Ludwig Erhard's desk from the Bavarian economy ministryImage: DW/T. Rooks

But Erhard had other far-reaching ideas. As East Germany set about on its planned economy and the US put its weight behind a free market economy, Erhard created the social market economy. It was based on free market principals, but with the important addition of employee participation in key decisions like wages, benefits and working conditions through their presence on boards, and a strong social safety net.

It's never too early

For some this may seem like ancient history, especially in a now unified Germany. But the social market economy is still seen today as the foundation for the country's continued success. And the Ludwig Erhard Center is proving that anyone can learn from the past and that the study of economic history is an important discipline. 

"The economy concerns us all. It starts with pocket money, with shopping. Every teenager has a mobile phone. Economics must be taught in every school, starting in first grade," said Kurz, who has also taken on this particular task through Ludwig's Little World — the Learning Supermarket for Kids. The learning supermarket is just what it sounds like, a tiny shop filled with miniature wooden fruit, fish, plastic chickens and cans and even small shopping charts. It is a place to teach kids language skills, how to shop and calculate. 

Ludwig's Little World at the Ludwig Erhard Zentrum in Fürth
Miniature wooden food in 'Ludwig's Little World — the Learning Supermarket for Kids' is a highlight for any children. Here they learn how to shop, budget their money and interact with othersImage: DW/T. Rooks

A German export model?

The center has also gotten the attention of grown-ups. Recently the center had its first one-week summer camp that brought together 24 participants from 16 different countries, especially Latin America, to delve deeper into Germany's unique traits. 

"This week, the participants became acquainted with many of the things that define Germany and make it attractive economically and as a country — like family businesses, the dual training system, and the German political system," said Kurz, adding that the program is here to stay. 

Slowly the economic museum in sleepy Fürth is moving into international focus. 

"The Chinese ambassador spent a lot of time with us. He attended the opening and was here the previous evening for a special VIP tour. From him we learned why Erhard is so popular in China: After the death of Mao Zedong, Deng Xiaoping had to think about how to run the economy to fight poverty, and he turned his gaze to Germany, which had been completely destroyed after the war, and the 'father of the economic miracle,' Ludwig Erhard," Kurz explained.

Seeing the future at the Ludwig Erhard Zentrum in Fürth
A tour of the center ends in a large room with an interactive video and large mirrors. Visitors are welcomed to think about the future and how Ludwig Erhard's ideas impact their lives and possible the futureImage: DW/T. Rooks

Yet the center is not stuck in the past, but is in the final phase of planning an economic research center, which will be operated in cooperation with a non-university research institute and the University of Erlangen-Nuremberg. Initially it will provide about eight jobs for economists and work closely with external researchers. It should go a long way in bringing more of the world to this town in Bavaria to learn and think about the pioneering economic ideas of an epoch-making man born at the end of the 19th century to a provincial shopkeeper. 

Timothy A. Rooks
Timothy Rooks One of DW's business reporters, Timothy Rooks is based in Berlin.