Industrial Plans For Germany - Economic Consequences

Economic Consequences

The reduction in steel production that resulted from the first and the second level of industry plans meant that a steel production bottleneck ensued which forced other parts of the German industry to fall below their own permitted production levels. The economy of the Bizone finally hit rock bottom early in 1948 as a consequence of this.

Compounding the problems in the steel industry and their effects on the German economy as a whole was the prohibition against importing high-grade Swedish iron ore. Until that was lifted in 1948, German steel plants had to rely on low quality local ore which required almost twice the amount of coal to process. Moreover, the Germans were also forced to sell their steel at wartime prices until April 1, 1948, which meant large losses for the industry. Additionally, attempts to "decartelize" the German steel industry also contributed to the low output.

The Allied Control Council set the price for German coal at half what it cost to produce it. From May 1945 until September 1947 the US, UK, and France exported German coal for $10.50/tonne, while the world price hovered closer to $25–$30 per tonne. During this period the Allies thus took roughly $200,000,000 out of the German economy from this source alone. In September 1947 the export price was raised but remained set at $5–$7 below world-market prices.

In Germany the shortage of food was an acute problem. According to the UNRRA in 1946–47 the average kilocalorie intake per day was estimated to be 1,800, which according to Alan S. Milward was an amount insufficient for long-term health. Other sources state that the kilocalorie intake in those years varied between as low as 1,000 and 1,500. William L. Clayton reported to Washington that "millions of people are slowly starving."

Germany received many offers from Western European nations to trade food for desperately needed coal and steel. Neither the Italians nor the Dutch could sell the vegetables that they had previously sold in Germany, with the consequence that the Dutch had to destroy considerable proportions of their crop. Denmark offered 150 tons of lard a month; Turkey offered hazelnuts; Norway offered fish and fish oil; Sweden offered considerable amounts of fats. However, the Allies disallowed the Germans to trade.

The UNRRA charter allowed it to operate in Germany to assist non-ethnic German displaced persons, but did not permit it to assist ethnic Germans. In 1948, after three years of occupation, the combined US and UK expenditure on relief food in Germany through GARIOA and other means stood at a total of close to $1.5 billion (that were charged to the Germans). Still, according to Nicholas Balabkins, German food rations were deficient in composition and remained far below recommended minimum nutrition levels. Officials in authority admitted that the distributed rations "represented a fairly rapid starvation level". (see also American food policy in occupied Germany).