The Clancy Smith Ludwig Erhard Cigar Story
By David Henderson
One of the advantages of having been involved with free-market ideas for half a century (yikes—I’m getting old!) is that I’ve also become friends with people who were involved even longer, some famous, such as Milton Friedman, and some not famous, such as my mentor at the University of Winnipeg, Clancy Smith.
Clancy was diagnosed with multiple sclerosis in 1977 and suspects that he had it as early as 1975. He is now in his early 70s and his mind and memory are still sharp. When I go to my cottage in Canada every year, I visit him near the start of the trip and near the end, and I always learn something.
That brings me to this story of a fun interaction between Clancy and the architect of the German economic miracle, Ludwig Erhard.
Erhard, who had moved on from being an economic adviser and decision maker in the late 1940s to being Chancellor of Germany in the early 1960s. In about 1973 or 1974, when he was no longer Chancellor, he gave a speech at the University of Manitoba. Clancy attended. Clancy, seeing Erhard with his body guards before the speech, went up to pay his respects and to get Erhard to autograph a picture he had of Erhard. Erhard obliged. Erhard was legendary for enjoying a good cigar. He reached in his jacket pocket for a cigar and found that he was out. At the time, Clancy enjoyed cigars too. He offered Erhard a $1.50 cigar in a plastic tube. Erhard accepted and lit up.
I forgot to ask Clancy whether he spoke to Erhard in German. Although his name wouldn’t suggest it, Clancy is Jewish. That didn’t stop him from finding German to be a beautiful language and studying German intensely at the University of Winnipeg.
By the way, although this 4-minute video of Erhard’s role in the German economic miracle is quite good, it contains a major mistake in the first minute. The narrator claims that hyperinflation had destroyed the value of the reichsmark. That’s false. Hyperinflation requires hyper increases in the money supply. As I point out in “The German Economic Miracle” in David R. Henderson, ed., The Concise Encyclopedia of Economics, in 1947, the amount of money in the German economy was 5 times the amount in 1936. That’s not enough to cause hyperinflation. What so badly hurt the value of the currency was that higher money supply combined with rigid economy-wide price controls.