Currency Reform in Berlin in 1940s

The purpose of this research is to examine the issue of currency reform for Berlin, and the implementation of policy stemming from this issue, which occurred in 1948, in the aftermath of the Second World War. In this examination, consideration is given to (1) the objectives of the Western Allies, and those of the Soviet Union, (2) effects on the issue of prior events, (3) the resolution of the issue, and (4) long-term effects of the issue and its resolution.

Currency reform for Berlin in the late-1940s was a part of a wider currency reform for all of Germany -both East and West. In turn, currency reform for Germany was but a part of the broader political struggle of the day between the Western Allies and the Soviet Union.

Currency reform for Berlin assumed an exaggerated significance in 1948, because it served as the formal pretext for the imposition of the Berlin Blockade by the Soviet Union (Kennan, 1967, p. 443). Sight must be lost of the fact, however, that German (and Berlin) currency reform was not the major issue. The major issue was the political confrontation between East and West over the future of Germany (Binder, 1981, p. 73). The political issue was brought to a head in the winter and spring of 1947-1948 though a volatile combination of Soviet fears, an erroneous perception and analysis of events by the American commander in Berlin (General Lucius Clay), and by the ideological contest between capitalism and commu

Related Essays

Creation of the Single German Economy .... unification. Currency reform for Berlin in the late-1940s was a part of a wider currency reform for all of Germany--both East and West. In .... (1437 6 )

Merger of East/West German Economies .... unification. Currency reform for Berlin in the late 1940s was a part of a wider currency reform for all of Germany both East and West. 1 .... (1412 6 )

GERMANY MARSHALL PLAN .... The success of decontrol and currency reform that year began .... such as encouraging location in West Berlin and in .... that industry had faced since the late 1940s. .... (5347 21 )

Eastern Europe .... Britain and France set up a currency reform program in .... flood of escapees fleeing through the Berlin Wall which .... released a flood of demands for reform across the .... (5185 21 )

US-Soviet Relations .... Soviet hegemony over Eastern Europe in the late 1940s. .... the Cold War was the Berlin blockade of .... Western Allies decided to implement currency reform in western .... (6981 28 )

development of adverse conditions with respect to these factors. Conveniently overlooked by most free market advocates, however, is that fact that the reason laws concerning these factors are in existence in the United States and most other free market economies is because free market principles did not preclude the development of adverse conditions with respect to them. A key theory upon which the free market concept rests is rational expectations -how an economic agent would act when in possession of complete and correct information relative to the economy (Shotter, p. 102). Rational expectations are supposed to insure that a free market economy will be self-correcting (Shotter, p. 101). Shotter concluded, however, that (1) agents seldom have complete and correct information, and (2) rational expectations do not work even when they do because too few agents in the economy exercise control over key endogenous variables (Shotter, p. 116). The Soviets, of course, recognized none of the good and all of the bad in market capitalism. They proposed to create and preserve economic wealth and equity in Germany through a Marxist economic system (Binder, p. 73). Marxian economic thought is theoretically close to classical econ

Category: Economics - C