A currency reform is carried out in the Western zones
Awash with money printed to buy arms, the war economy of the Third Reich suffered from extreme currency devaluation. Coupled with food rationing and declining industrial production after 1945, the weak Reichsmark lost almost all value, and the money economy all but collapsed. Traders preferred either to barter or wait for better times to sell the goods that they hoarded. The government of the Western sectors badly needed to make money worth something again and stimulate economic growth. The decision was taken to launch a new currency called the Deutsche Mark (DM). When Stalin rejected this plan, the Western governments decided to go it alone and launch the new currency without the Soviets.
Every West German adult was issued with 40 DM and told to exchange their holdings of Reichsmark for Deutschmark. Seeing that the new currency was worth earning, wholesalers and producers released their hoarded products and shop windows suddenly filled with things to buy. People could go shopping without the need for the black market. The currency reform thereby provided an incentive for industry to restart production and laid the foundations for the period of rapid economic growth experienced in West Germany during the 1950s that became known as the “economic miracle”. The immediate impact of the reform for West Berliners was even more dramatic: the Soviet Union imposed a year-long blockade of the city to prevent the Allies from introducing the new currency in their sectors. The West responded with the Berlin Airlift.
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