Quotation of the Day…

by Don Boudreaux on May 28, 2012

in Growth, History, Prices, Stimulus

… is from page 231 of my GMU Econ colleague Larry White’s new book, The Clash of Economic Ideas:

In June 1948, a telephone rang in the office of Ludwig Erhard, the German economist who was director of the Economic Administration in the UK-U.S. occupied zone of Germany.  At the other end of the line was the American military commander, General Lucius Clay.  On Sunday, June 20, Erhard was scheduled to give a radio address detailing a planned currency reform to replace the feeble old Reichsmark with the new Deutsche Mark.  Clay’s office had learned that Erhard was also planning, without official approval from the Allied military command, to use the occasion to issue a sweeping order abolishing many of the price controls and rationing directives then in effect.  When Erhard came on the line, General Clay said to him “Professor Erhard, my advisors tell me that you are making a big mistake.”  Erhard replied, “So my advisors also tell me.”

The decontrol went ahead nonetheless, and Germany’s remarkable economic recovery began.

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