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Ludwig Erhard was an economist and statesman who, as economics minister (1949–63), was the chief architect of West Germany’s post-World War II economic recovery. He served as German chancellor from 1963 to 1966.
Following World War I, Erhard studied economics, eventually joining an economics research institute. Because he was untainted by Nazi associations, he was entrusted by the postwar Allied occupation authorities with the reconstruction of industry in the Nürnberg-Fürth area. Thereafter he served successively as economics adviser in Middle and Upper Franconia, economics minister for Bavaria (1945–46), director of the Advisory Committee for Money and Credit (1947–48), and director of the economic council for the joint Anglo-U.S. occupation zone (1948–49). By the end of 1948 the currency reforms that he had instituted the preceding summer, coupled with the abolition of rationing and of other commercial restrictions, had already somewhat buoyed the prostrate German economy.
From September 1949, as economics minister of the new Federal Republic of Germany under Chancellor Konrad Adenauer, Erhard was commissioned to continue his policies of reconstruction. In the following years he applied his “social market system” to the problems of economic renewal with phenomenal results, achieving what has often been called the German “economic miracle.” Based on free-market capitalism, his system included special provisions for housing, farming, and social programs.
Erhard was appointed federal vice-chancellor in 1957 and succeeded Adenauer as chancellor in October 1963. His government was troubled by his predecessor’s persistent criticisms, an uncertain foreign policy, and a budget deficit. His decision to raise taxes in response to a slight recession in the summer of 1966 caused cabinet members to defect, and by the end of the year he had been forced to resign. In 1967 he was named honorary chairman of the Christian Democratic Union.
