The reference relates to the miracle achieved by two of the defeated central powers in World War II, Germany and Japan, in post war reconstruction, fit to crown the enviable position of being ranked as the second (Japan) & third (Germany) global economic super powers. A remarkable accomplishment to secure after suffering crushing defeat and total devastation of their economy and its infrastructure . In the process these two countries have overtaken the Allied powers, viz. Britain and France,(the victors) and all other developed countries of Western Europe and North America, except the U.S.A. How was this miracle achieved? Why our country possessing far greater natural resources, area and population could not achieve similar feat?

Before analysing the contributing factors for their "miracle" performance, we may briefly recount the war torn devastation and other appalling conditions in which these two countries were placed at the start of the period i.e. around 1947 and how they could change the scenario in less than two decades.

Basic Information about Germany

1. Area: 137,826 sq. miles (356,970 sq.km). In size, however, Germany is smaller than France (544,000 square kilometers) and Spain (506300 square kilometers)

2. Natural resources: iron ore, coal, timber, copper, natural gas, salt.

3. Population of about 82.1 million, the largest in Europe after the Russian Federation, followed by the United Kingdom (59 million), France (58.6 million) and Italy (57.5 million). It is equal to the population of single States in India like "Andhra Pradesh" or "Tamil Nadu", but less than the population of bigger States like U.P. or Bihar

4. Literacy: 95 %; Compulsory School Attendance: 10 years; Elementary school 'Grundschule': ages 6 through 10 ; Academic high school 'Gymnasium': ages 11-19; Vocationally oriented 'Realschule': ages 11-16;

The diploma from the Gymnasium is the basic requirement for admission to a university, the Realschule diploma to a commercial or technical college, or to the last three years of Gymnasium. A diploma from a Hauptschule, a vocationally oriented branch with five years of education, ages 11-15, is generally required to enter a formal three-year vocational training program for skilled technicians, craftsmen etc., combined with classroom instruction at a vocational school (dual system of vocational training).

Germany turned into a powerful nation in Europe in the second half of the 19th century. The credit for this largely goes to Otto Von Bismarck. Under the "Iron Chancellor", Otto Von Bismarck, Germany grew from a loose confederation of weak states to a unified powerful empire. His smart and dashing way of making politics (winning three wars in eight years!) led to the extension of German borders and the rapid growth of German industry.

In 1878-79 Bismarck implemented significant economic reforms, which made Germany one of the strongest financial powers in Europe, one of the chief assets of which was the putting of Tariffs on iron and grain. Bismarck introduced the world's first welfare scheme which provided sickness, accident and old age benefits.

Germany fought the First World War. Though Germany was defeated and it lost the war, it regained its economic and military powers within a few years and subsequent events led to the more fiercely fought Second World War.

It can be noted that Germany's democratic traditions are just 50 years old, with its only other experiment in democracy being the failed Weimer Republic of the inter-war period. Indeed, there is skepticism toward the institutions of a country that in just 100 years has gone from imperialism, to fascism, to communism and lastly to democracy.

Unlike Great Britain and France Germany was never a colonial empire. It had no overseas territories under its possession or control. It did not enjoy the status of an imperial power.

The twentieth century for Germany was filled with aggression and expansion, defeat and humiliation, vengeance and terror, obliteration, and, finally, with division and domination by two hostile camps that threatened to undo the world. At the end of World War II, Germany was in a shambles. Fire bombs -- more destructive than the atomic bombs that had been dropped on Hiroshima and Nagasaki -- had completely destroyed Dresden. The population of Cologne had dropped from 750,000 before the war to less than 32,000. Germany's storybook castles and great cathedrals lay in ruins, while make-shift shanty towns housed hundreds of thousands of Germans displaced by the Soviet occupation of the Eastern Provinces.

Industrial output was at a standstill, and German currency was practically worthless. A pack of American-made cigarettes could fetch more goods on the black market than hundreds of German marks. Germany was jointly occupied by British, French, Soviet and American troops. One of the biggest problems faced by the occupation forces was the utter collapse of the German economy. Obviously, devastation from the war was the principal cause of the German people's destitution, but the legacy of Nazi economic controls was also an important factor. These controls were largely continued by the Allies after the war.

All prices and trade were controlled, while the money supply spun out of control. As a consequence, there was almost no production and money was virtually worthless. Businesses hoarded what little merchandise they had and most commerce consisted of barter transactions. In a vain effort to stop inflation, the Allies raised taxes, which only had the effect of depressing economic activity still more.

Finally, two men stepped forward to try and fix the economy. First was General Lucius Clay, the commander of U.S. forces in Germany. He saw that something had to be done to get the German economy moving, if only to relieve the Allies of the need to provide relief aid. Beginning in 1947, he started planning for an overhaul of the German economy, especially the establishment of a sound currency.

The second key player was Ludwig Erhard, a German economist chosen by Clay to spearhead the economic reforms. They were instituted over the weekend of June 19-20, 1948, when the old currency, known as the Reichsmark, was withdrawn and replaced by the Deutsche mark, with 10 Reichsmarks now worth one Deutsche mark. Solemn promises were made that the Deutsche mark would maintain its purchasing power.

Enter Ludwig Erhard. Born in 1897 in Furth, and educated at the University of Frankfurt, Erhard had been a disciple of the great free market economist, Wilhelm Roepke. After serving as an economist in Nuremberg, Erhard was appointed head of the post-war Bizonal Economic Council. Looking over the wreckage from six years of total war, Erhard knew that only free market policies could get Germany back on its feet. To that end, he made two proposals: introduce a new currency, then insure its success by lifting wage and price controls.

Taking the country by surprise, Erhard went on the air on a Sunday night in June 1948. First, he announced that each German would be given forty Deutschmarks (replacing the old Reichsmarks). This would be followed by a second installment of twenty Deutschmarks. Credits and debts would be converted into the new currency at the rate of ten to one, and people would have to prove how they came by sums that exceeded 5,000 Reichsmarks.

Erhard knew that his currency reform would be doomed if the new money, like its predecessor, faced bare store shelves and empty warehouses. To prevent this, Erhard announced the second -- and by far more important -- part of his program: most of Germany's wage and price controls would be dropped. First, controls would end on a wide range of consumer goods. Within six months, controls on food would be dropped. Erhard gained support for his measures by billing them as a patriotic move designed to replace a "foreign" economic system that had been imposed on Germany. The German people were astonished to hear that all these changes would commence the next morning.

Almost immediately, the German economy sprang to life. The unemployed went back to work, food reappeared on store shelves, and the legendary productivity of the German people was unleashed. Within two years, industrial output trebled. By the early 1960s, Germany was the third greatest economic power in the world. And all of this occurred while West Germany was assimilating hundreds of thousands of East German refugees.

The Marshall Plan certainly helped, but its influence was not great enough to cause the German "miracle." As historian LaVerne Ripley points out, "vastly larger sums have been donated to other countries without preventing their economic disaster."

Ludwig Erhard didn't sport a red beard, nor is there any evidence that he spent much time near Kyffhauser Mountain. But he did save Germany, for a time, from one of its greatest enemies -- socialism -- and helped bring about one of the great success stories of the modern world.