President Bush’s decision to make a point about the importance of the new currency in Iraq goes way beyond the fact that the new dinars carry an image other than that of Saddam Hussein. The importance that a sound currency can have to a new nation cannot be overstated. At the end of World War II, Germany was devastated. Industrial output had collapsed. The country’s currency had no value. Germans were bartering cigarettes and pieces of chinaware. Stores were empty. Commerce was stagnant or nonexistent. And the country seemed without hope. Then came Ludwig Erhard, advancing two proposals: One was to end wage and price controls, the other was to introduce a new currency.

He surprised the country by going on the air on a Sunday evening in 1948. He announced that each German would be given forty Deutschmarks to replace whatever they held of the old Reichsmarks. They would get a second installment of 20 Deutschmarks. Credits and debts would be converted at the rate of 10 to one, according to a compact history of the events published in the magazine The Freeman on the 40th anniversary of the great move. It noted that people would have to prove how they came by sums that exceeded 5,000 Reichsmarks. By cou pling these reforms with the lifting of wage and price controls, Erhard calculated he could coax hoarders an entrepreneurs to place their holdings up for sale. “The German people,” as The Freeman described it, “were astonished to hear that all these changes would commence the next morning.”

The rest, of course, is history. Almost immediately, as The Freeman sketched the scene, the German economy came to life, the unemployed went back to work, and food reappeared on store shelves. And what became known as the economic miracle began. The Marshall Plan certainly helped, The Freeman noted, but it was really Erhard’s great gamble that unleashed German productivity and, in the view of some students of the period, did more than anything else to set the stage for the Western victory in the Cold War against Soviet Communism and for the reunification of Germany on the Free World’s terms.”We’re helping Iraqis to rebuild their economy after a long era of corruption and misrule,” Mr. Bush said in his weekly radio address. “For three decades, Iraq’s economy served the interest only of its dictator and his regime.… The new currency symbolizes Iraq’s reviving economy.” If it’s maintained as a stable currency, linked to something of value, there is plenty of precedent.