wealth and talent of a country, as were London and Paris. Hamburg, Cologne, Munich were the chief cities, and Berlin was kept going, but the government was confined to little Rhineland Bonn: the assembly originally met, and it was a sign both of the weaknesses and of the strengths of the new Germany, in a schoolroom undamaged in the latter stages of the war. Giving government a city of its own is generally a good idea: it allows other cities to be more interesting. But the common sense attached to the German Basic Law — it was not called a ‘constitution’, because its makers were acting on behalf of all Germany, not just the Federal Republic — spread elsewhere. Knowing what had done so much damage in the days of Weimar, the trade unions accepted sensible reforms: there were only twelve unions, they had considerable privileges as regards management, and they built up a considerable interest of their own in the fortunes of ‘capitalism’. They therefore had every interest in making sure that the system worked, such that they would be flexible as regards the introduction of new machinery, even if it meant a loss of old-fashioned or obsolete jobs. True, the position of the trade unions was in a sense quite weak in the early years because of the huge numbers of hungry immigrants. Twelve million of them poured in from the east, latterly from the Communist-run Soviet zone (3.2 million of them, four fifths of them aged between eighteen and twenty- five, 20,000 of them engineers and 4,500 doctors). Finally there was the Federal Bank as it was soon called. It was independent, or at any rate as independent as human wisdom could make it in the circumstances. Its brief was to avoid the inflation that had twice shattered the country’s finances. It managed to do so quite successfully. One result was that the Germans saved: they saved and saved, at twice the British rate. There was therefore money for investment, and German business duly invested, taking a long-term view, which the lack of inflation again made possible. German business, much of it medium-sized and family-run, flourished, and, when it had to deal with exports, would behave quite sensibly, in establishing a chamber of commerce that knew the market. Germans of course had been determined never to repeat their past mistakes, and they were sometimes very literal-minded in applying the lessons. Nevertheless, a remarkable country emerged from the years of the Marshall Plan.
Broadly speaking, the country was twice as rich as in 1950, itself a year much better than its predecessors. By 1959 Germany was producing half of Europe’s steel (30.6 million tons) and 50 per cent more than Britain; it was then the vital element in a manufacturing economy. By 1957 Germany had become the chief producer of automobiles in Europe, with 1.5 million to Britain’s 1.4 million and France’s 1.1 million. The Volkswagen was economic in fuel, not expensive, had an air-cooled engine and could be parked in a small place: it was popular worldwide. The fifties saw a world in which stable families took a joy in the wave of consumer gadgets that were coming on the market, at more and more affordable prices, such that refrigerators or washing machines or telephones or typewriters or new electric coffee-machines marked the decade. By 1959 German exports overtook British.
10. The Sixties
In the outcome of the great dramas of 1956, the Americans could be quite content. The European empires were finished; the West had been refashioned in America’s interest, or at any rate in the interest of most Americans. NATO took firm shape, as the Communist threat in western Europe receded; the fifties were a time of American triumphalism, and the immensely popular new President, General Eisenhower, was an apt and genial symbol. Eisenhower could as easily have been elected as a Democrat if he had chosen, but the Republicans, whose chief platform was tax-cutting, got in first. America had become very prosperous; her trade and investments boomed. By 1965 the USA produced 119 million tons of steel, almost as much as France, Germany (37 million, as against the maximum 10 million generously allowed in 1948), Great Britain and Japan put together, and it easily led in the consumer goods that marked the age — nearly 8 million television sets to very few German, for instance. The Europeans were catching up, but even in 1969 American workers earned over twice as much as German workers ($460 per month as against $209, and $199 in the British case). Three million Europeans emigrated to the USA in the fifties. However, Europe was becoming more united, and the impetus was really American: the European Economic Community contained the arm spiritual of NATO. Besides, for all of the talk of a European bloc, it was open to cheap and very rewarding investment.
The USA did very well out of this. The conglomerates such as IBM spread abroad. Investment ran at $2bn per annum in these years, and in 1956 American private investment abroad exceeded public spending there for the first time since the twenties. From 1946 to 1950 US foreign investment rose from over $7bn to nearly $12bn and by 1958 $25bn, and spread from mining and trade into more sophisticated fields such as petroleum-linked industries and manufacturing. The investment was dominated by the ‘multinationals’, firms which set up in western Europe to take advantage of lower costs or a growing market, or to escape from the tariffs that would otherwise have hit them, and some of the great American companies became worldwide names, the products ranging from soap to oil tankers. They were regarded as models of efficiency, with headquarters of plate glass and concrete, abstract sculptures and fountains well to the fore, and they developed a large research-and-development infrastructure. Their managers were also, often enough, teachers: IBM became something of a model, even, in the 1960s, for Romanians whose Communist government was then trying to become less dependent on the USSR. There was much alarm at the time about the allegedly predatory nature of this, but in 1950 there were higher western European investments in the USA than vice versa and in the later 1950s the USA had a positive balance of payments, despite the NATO spending. In the fifties and sixties — at any rate their first half — American business had a formidable reputation: it could do what Europeans could not imagine themselves doing, because the quality of management was so high. Some explanation is needed. In the twenties, when the phenomenon had first struck Europeans, it had seemed inhuman — workers like cogs in a machine, much exploited and put upon, turning out the same bit of a machine or an automobile on an assembly line, and not able to take any pride in the craftsmanship of a completed product. Fritz Lang, in the Weimar cinema, or Charlie Chaplin, captured this hostility, though it had roots in the England of Blake (‘dark satanic mills’). But it resulted in a huge flow of goods, and in high wages; during the war it had produced the extraordinary American production miracles, whereas for much of the time German workers, putting together a first-class piece of aeronautical engineering in craft groups, might take pride in the product but did not make nearly enough of it. In Europe in 1948 there was not a single continuous strip steel mill, because small firms and cartels resisted it, such that the cheap steel needed for refrigerators or automobiles was much more expensive than in the USA. A washing machine cost eight man-hours in New York, and 500 in Paris. But it was American management that shone.
It had quite long origins: even in the 1830s, Stendhal, for instance, has throw-away and dismissive lines about American business and dollar worship, and the Teamsters, a famous union mainly on the docks, took their name from the mule-drivers of yore. In the 1850s Sam Colt was able to assemble a first-class gun in thousands, because he made each part the same, to within a thirty-second of an inch to start with, and then a five-hundredth, so that they were interchangeable, and Linus Yale, of locks fame, goes back to that period. Machines were soon made with interchangeable parts, and the tools that produced these became an American specialty, keeping British war industries going in both of the world wars. Henry Ford famously transferred this to motor cars that were therefore cheap. Various explanations have been offered: unskilled immigrant labour, needing to be given simple and repetitive tasks within their capacity; expensive labour, putting pressure on firms to diminish their costs by use of machinery; practical education, such as was plentifully on offer; the peculiarly classless atmosphere in the USA, where ordinary workmen would co-operate on friendly terms with an owner when it came to reporting faults and taking an interest in machines, whereas elsewhere workmen regarded them as an enemy and in Britain were notoriously reluctant to accept them, because they would be tended by fewer workmen and might depress wage rates. In the Marshall years British trade unionists went to the USA to learn about productivity and the results were generally depressing. But the essential seems to have been the quality of management.
In Europe at large this was misunderstood, because of business schools; and it was a curious fact that they did more damage than good. Any true businessman regarded them as pernicious or at least useless: Sir James Goldsmith remarked, for instance, that he would never hire anyone for senior management who had failed to leave school at sixteen. One trouble was that those who could not manage, taught, and sometimes preached. Real managers have better things to do, and asking them about theories of management is equivalent to asking a first- class golfer to lecture on ballistics. There was even around 1900 a group of men who wanted to make business academically respectable and Harvard acquired a business school that its founders expected to rival the law school. Frederick Winslow Taylor (1856-1915) invented the time-and-motion study, in which white-coated experts studied
