This weekend brings the 60th anniversary of one of the most important days in the common history of Americans, Germans, and the Western world, the debut of the Deutsche Mark. The introduction of the new German currency jump-started the German economy. It also decisively halted the expansion of communism in Europe.

On June 18, 1948, the Allied commanders announced a sweeping monetary reform in West Germany. The terms of the reform were dictated by the Americans. Three years after the fall of the Third Reich it was clear that Germany had to get rid of the Nazis’ Reichsmark, which by then was more or less trash. The official exchange rate was 1 RM to the dollar, but on the black market the Reichsmark was worth less than a penny. And for all practical purposes the real currency for Germans was American cigarettes.

But no elected German politician dared to propose a reform as sweeping as the Americans did. Each German received 40DM, the new money, on June 20, fifty years ago today. But the rest of the reform was a massive devaluation. Savers’ accounts were reduced to 10% of their old nominal value. Under the DM reform, savers lost. It was the second expropriation of that kind that Germans experienced within a single generation. In the 1920s, the hyperinflation had also hit families and, especially, the middle class.

Harshness was a precondition for success, but it was not sufficient. The German economics director in the united American and British occupation zone, Ludwig Erhard, stepped in. Erhard, a “liberal” in the classical sense of the word, was convinced that reform would only work if the forces of the marketplace were allowed to work. Therefore he decided to lift nearly all post-war price-controls — without telling the Allies first.

The next day Erhard was summoned to see the American commander, Lucius Clay. Their conversation has become legendary. Clay reportedly told Erhard that he, as a German civil servant, was not supposed to alter the rules set by the Allies. Erhard replied, “Sir, I didn’t alter them. I abolished them.” Later Clay complained to Erhard that Clay’s advisors disapproved of the idea. Erhard said, “So do mine.”

History has proven that Erhard was right. Germans knew that Erhard was undertaking important free market measures. That knowledge helped the monetary reform work like a perfect lab experiment for capitalism. On June 21, the first day the Germans could spend the new Deutsche Mark, the shop windows were suddenly packed with products the starving Germans had missed for years: bread, ham, cheese, soap, even electrical appliances.

Hoarding and the black market disappeared overnight. The “day when everything was avail-able again” remained a crucial experience for an entire generation. This explains nostalgia among Germans for their Deutsche Mark even today, 10 years after the currency was merged into the euro.

Two days after the Deutsche Mark was introduced, the Soviets reacted by sealing off West Berlin from the rest of Germany. The Western Allies reacted to the blockade with the Berlin Airlift. Between June 25, 1948, and May 12, 1949, American and British airplanes — Berliners called them candy bombers — flew in loads of necessary supplies.

The air drops guaranteed the survival of the city, the most important sign of Allied commitment to Berlin yet. The details of the Airlift, again, are known. What tends to be forgotten is that it was the threat of a good currency that scared Stalin into making the blockade. Marks meant as much as missiles.

After all the monstrosities of the Third Reich, West Germans suddenly found themselves on the good side of history. This continued support by the Allies was enormously important moment for West Germans psychologically. The Allied framework helped Germans to remind themselves of what they were capable. Liberty and economic success worked hand in hand.

Erhard is important because the good news of his action in this period also foreshadowed some mixed news that would come later. Erhard always told his fellow countrymen that their economic success was no miracle at all. It was just a “social market economy” at work.

He told himself that his “social market economy” was capitalist, and that capitalism always is “social” insofar as it delivers “Prosperity for All” (the title of Erhard’s most popular book), provided inflation is under control and competition is secured through tough anti-trust laws. He used the adjective “social” as a marketing tool to convince Germans of his free market ideas.

But he was trapped by the ambiguity of the adjective “social.” You can plead for more state intervention as well as for less — and always refer to the ideals of “social market economy.”

Succeeding Germany governments would use the “social” adjective as an excuse to overspend. Erhard couldn’t stop governments from overspending; he had to swallow a social security reform that was much too generous; and he was ridiculed when he called for moderation in wage increases.

Erhard was a visionary but a terribly bad administrator. In 1963 he was elected as federal chancellor, but his term lasted only three years. When West Germany dropped into its first recession, Erhard was forced out by his own Christian-Democratic Party.

In hindsight, what matters most is Erhard’s courage to do the right thing at the right moment. He proved in 1948 that the combination of freedom, democracy, and capitalism works. It was a lesson not only for Germany, but for America and the rest of Europe.

The anniversary of the Deutsche Mark is passing virtually without commemoration in America. In fact we should celebrate this victory around the world.

Mr. Piper is a senior correspondent in New York for a German newspaper, Sueddeutsche Zeitung.