The founding of the Federal Republic of Germany : Germany

Western Germany had already begun receiving American foreign aid in 1946 (under the GARIOA Program), but it was George C. Marshall’s program to combat “hunger, poverty, despair and chaos” (the Marshall Plan) that provided the crucial boost for western Germany’s economic recovery (1.4 billion dollars between 1948 and 1952). While in the Soviet-occupied zone the process of transferring industry to public ownership continued, the “social market economy” system (Alfred Muller-Armack, 1947) continued to gain ground in the west after the currency reform.

The new economic order was intended to prevent, on the one hand, the “stagnation of capitalism” (Walter Eucken) and, on the other, a centrally planned economy which -would be a hindrance to creativity and initiative. This concept was supplemented by the rule-of-law and social-state principles embodied in the Basic Law and by the country’s federal structure. The constitution was deliberately termed the “Basic Law” in order to emphasize its provisional character. The idea was that a definitive constitution should only be adopted after Germany’s reunification. Upon its promulgation by the Parliamentary Council in Bonn, the Basic Law entered into force on 23 May 1949.