Thinking Small (45 page)

As word spread that a new currency was soon to become standard in Germany, the Volkswagen factory was bombarded with requests from customers to have their ration cards exchanged for vehicles before the currency changed. It was impossible for the factory to produce so many cars all at once—and because this was happening in many other industries in Germany at that time, it also became increasingly harder to get suppliers to provide enough materials to fulfill Volkswagen’s
own
ration cards. Everyone was trying to trade in their cards before they became obsolete. But even such doubt and panic did not deter Erhard. He pushed his currency reform through and hoped for the best.

The days directly after Erhard implemented his reforms did not look auspicious for large German businesses, or for some small, industrial towns. There was now 90 percent less existing cash than there had been before the reform. Wolfsburg, for one, suffered almost immediately after Erhard’s wild move. The change of currency hit the town and factory hard. All the town’s land had been seized as former property of the German Labor Front, so all liquid and fixed assets were more or less null, which meant they had very little capital before the reform, and they had much less after it. Volkswagen was the town’s biggest taxpayer and it too was having severe liquidity problems directly after the currency conversion. In fact, the town had to apply to the Allies for a bridging grant to get it through. To some, it was as if their bank accounts had been halved, even as their bills became twice as large.

Needless to say, Nordhoff’s first few months after the currency exchange were extremely tough. In terms of exports, for instance, the external demand was there, but it became impossible to keep up with that demand because of exchange rates and because bilateral national trade agreements had not yet experienced the same loosening as the German economy had: The factory was doing well and had orders in other countries to fill, but with the currency exchange rate at the time, it was calculated that VW would
lose
about 1,596 DM for every exported car! Such a loss seemed to point to the immediate termination of such export agreements, but in a very brave (and unreasonable, or so many thought) move, Nordhoff remained true to Volkswagen’s word; he decided to take the loss and hold his breath.

Nordhoff’s newfound confidence in the plant had a lot to do with his shift in attitude toward the strange small car sitting at the center of it all. Nordhoff was beginning to appreciate what he had; indeed, he was captivated by the machine now. In a speech to his workers, he would later gush over his own baby
blue Volkswagen Beetle, saying: “I have to tell you, it’s really fantastic. It doesn’t
go (lauft);
it
flies (fliegt)
 …”
²
Perhaps in the past, he might have thought of driving a Mercedes, he goes on to say, but such things no longer crossed his mind: “This car is so sweet and wonderful,” he said: How could he ever drive anything else? Even the reserved, practical Nordhoff hinted that he thought of the car as being alive, calling it “an amazing automobile with a special personality.” Nordhoff had clearly come a long way from his early days at Opel, when he’d criticized Porsche’s design. In fact, he would later admit that his most important decision at Volkswagen was really a simple one: the decision to stick with the original design of Porsche.

If the most crucial moments in our lives are often a surprise, then realizing that he had fallen for the Volkswagen was Nordhoff’s surprise crucial moment. And the little car had found a good caretaker as well. It was Porsche’s brainchild, adopted and then abandoned by the Nazis, liberated by the Americans, given new life and nurtured by the British, especially by Ivan Hirst. Now it had finally landed in the careful hands of Heinrich.

For its time, the Volkswagen was a highly unique car. After all those years of constant testing, the car’s combination of a swing axle, central-tube framing, torsion bars, and opposed air-cooled engine at the rear were indeed a fortuitous combination, as was its beetle-like, streamlined shape and (especially) its affordable price. After the war, it seemed to suddenly dawn on Europe that it was time to make and own just such a car—one that was inexpensive but still reliable and able to perform in the way a luxury car could. That meant the VW was actually ahead of its time. Nordhoff understood this, and came to think of the car as a gift. That was the main reason he stuck to his export agreements: The future looked exciting, and possibly rewarding, if only he was patient enough to wait it out.

July 1948
ushered a late San Francisco–style summer into Germany, and the warm air was like a balm. People opened their windows wide, letting the light flood in and the gentle breezes blow through. For the past seven years, shops and storefronts around Germany had gradually emptied to the point where even the most basic of objects, like toothbrushes and soap, were nowhere to be seen. But in the summer of 1948, with the currency reform and the end of price controls, suddenly all those basic objects—and many other objects besides—reappeared. One store after another began restocking shelves, brand-new goods displayed in their newly cleaned windows, opening their doors to welcome customers again. A sense of abundance spread quickly like dominoes falling across the land. Saucepans, papers, ink, coffee mugs, shoes, picture frames, silverware, jam, grains, brushes, furniture, clothing, books, medicine—all of these much-longed-for goods were suddenly available again. Life quickened. The change felt mystical. There was a kind of holiday mood across the country. Even the cows and chickens seemed to be happier: in the week after the currency reform, there was a jump in the supply of both butter and eggs!

In some areas of Germany, the change seemed to happen literally in one day. The new deutschmark, alongside a number of other reforms, went into effect on June 20, 1948. On June 21, many felt like they were living in a new world. One German American economist working for the American military government at the time claimed Erhard’s move had “transformed the German scene from one day to the next
¹
 … goods reappeared in the stores, money resumed its normal function, the black and grey markets reverted to a minor role.… The sprit of the country changed overnight. The grey, hungry and dead-looking figures wandering about the streets in their everlasting search for food came to life.…”

Still, it would be inaccurate to paint Germany as a country full of only smiling faces and shiny eyes that summer of 1948. The sudden change sparked a backlash of ill feeling in some areas, as people were shocked at the abundance that suddenly appeared. Clearly, many of the goods had existed before the currency reform, but people had been hiding or hoarding them, feigning a lack of stock or overcharging for what they did sell. Some even lashed out at the store owners or farmers who suddenly had an abundance of wares for sale. One woman in Frankfurt, for example, brought a fresh basket of eggs to the market only to have the crowd turn on her. “Where were those eggs last week?”
²
they asked. The woman went home wearing her eggs on her clothes; the people pelted her with them.

The currency reform also drew a bright red line through Germany. The Soviet Zone responded to Erhard’s changes by withdrawing from the Allied Control Authority. What to that point had been figurative was in a sense made official: There were now two Germanys. But the currency reform was not a reason for that division; it was simply one of many visual representations of it.

One thing certainly became clear in that summer of 1948 in West Germany: Erhard’s bet on human behavior had proven right. When price controls and ration cards were taken out of the picture, the mentality of hoarding and fear all but vanished. Erhard’s critics had been wrong: Removing controls did not make people more greedy and animal-like, but rather relaxed economic tension and allowed for an economic mutuality to begin. People
wanted
to buy and sell. It wasn’t that conditions had changed overnight, but the way those conditions were
perceived
certainly had. Seeing things in shop windows and on shelves gave people a sense that everything was finally okay again, that there was no need to panic and hide what they had. The mentality had changed, and so the reality changed as well. The economy grew at an astonishing rate. It was referred to as the
Wirtschaftswunder,
the Economic Miracle. And Ludwig Erhard would go down in history as its father and guiding star.

It wasn’t only the currency reform and new economics that were effecting change in Europe—it was also the new spirit that was arriving at just that same time, ushered in by programs like the Marshall Plan. While it’s true that Germany would see only $1.4 billion of the tens of billions of dollars that would stream out of the United States and into Europe over the next four years (meaning that, even at its peak, Marshall Plan aid was less
than 5 percent of Germany’s national income), the money wasn’t the important thing—it was what that money stood for, and it was why it was being given. It was the step of trust, the chance to start again, all things much harder to equate with numbers. Vernon Walters, the U.S. ambassador in the State Department in 1947, later said that the genius of the Marshall Plan
“was to instill psychologically the idea that there would be a future, which also created a greater European economic and, eventually, political unity,”
³
going on to say that “the dramatic change in the last half of 1948 and the first half of 1949 in Europe was unbelievable. People had confidence. They began to build because they thought there would be a future and that future would be free.”

The feeling of renewal eventually spread to Wolfsburg too. While the city didn’t have shop windows to fill, it did have a factory, and alongside Nordhoff’s new philosophies and plans, the currency reform and the ending of ration cards eventually turned in the Volkswagen’s favor. Absenteeism plummeted at the plant. Before the reform, in May 1948, it had been estimated that each worker missed at least 9.5 hours of work every week: This was because many still had to go out and hunt for food or barter on the black market for their basic needs and supplies. In October 1948, the number of missed hours was down to 4.2 per week and would only descend more rapidly from there. In May 1948, VW made 1,135 cars. In June, that number was up to 1,520 cars. In July, 1,806. And by the end of the year, they were making over 2,300 cars per month. The increase in productivity was helped by the fact that the workers were eating better than they had in years. Food was no longer the focus of each day. In the
records in 1947, one sees as much as 15 percent of the staff bringing in doctors’ notes from sickness, many citing malnutrition. In December 1948, only 3 percent of the staff brought in such a note. People were growing healthier, and work was beginning to mean something to them again; indeed, some were even starting to feel a sense of pride and enjoyment about it.

The Marshall Plan did not provide aid for the Volkswagen plant directly. Nordhoff got by entirely on his own during the first hard months after the reform, sometimes asking his car dealers for loans in order to have something to pay his men. But as it took effect, the Marshall Plan helped VW inadvertently because it assisted the suppliers of the parts, which meant they got more quality parts, and they got them on time now. The plant also benefited greatly from the new attitude the Marshall Plan helped to instill: In Europe and America, it was becoming possible to think of Germany in a way other than “the enemy” again. But the biggest direct help for the Volkswagen factory came from Erhard’s removal of price controls, because a lack of price controls eventually made trade with other countries much easier, indeed favorable. Between June and December of 1948, industrial production in Germany increased by 50 percent. But no other car company had the type of growth that the Volkswagen plant had. No other car company was in a position to make so many cars with a moving assembly line, nor did any other company have a People’s Car.