Revaluing the Mark

Month after month, West Germany's supercharged economy kept pumping out its ever-growing stream of exports. One result was inflation at home; another, angry grumbling abroad from trading partners whose currencies piled higher and higher in West German bank vaults. A remedy was apparent: an increase in the value of the West German Deutsche Mark to make German goods more expensive abroad (discouraging exports) and foreign goods cheaper for German importers (encouraging imports).

But to a man, the Germans squelched rumors of revaluation. "No valid case for it," intoned the official Bundesbank. "Too late," agreed Economics Minister Ludwig Erhard. Then last week, having put the speculators off the trail, they went right ahead and revalued the Mark upward 5%, increasing its value to four to the dollar. The announcement came one day before the arrival of U.S. Ambassador-at-Large Averell Harriman, who would be happy to hear of any gesture toward helping close the U.S.'s dollar gap.

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