History of the Berlin Wall: Why the Wall was built up
  
Until 1961 East German citizen were allowed to travel to West Berlin.
Travelling to West Germany became difficult after closing the border between  East and West Germany in 1952.
The Wall was erected in 1961 because more than  2.6 million East Germans escaped to West Berlin or West Germany from 1949 to  1961 (total population of East Germany was about 17 million!).
 
The life in the West was much better than in the East after 1948. West  Germany including West Berlin had got financial help through the Marshallplan  from the USA. In East Germany a communist system was established and many  people had to suffer under repressions of the Communist party.
In May 1952 the open border (Zonengrenze) between East and West Germany was  closed by the East German government.
In the years after 1952 it became more difficult and dangerous to escape to the  West over this border.
However, the sectorial borders between East and West Berlin were not closed.  Many East German citizen went to East Berlin and from there to West Berlin.  Once arrived in West Berlin they stayed there or were fled out to West Germany.
East Germany lost too many skilled workers in these years.
Another big problem were the two currencies in Germany and especially in  Berlin. West German DM had been exchanged into East German DM at a rate of 1:4 (1  DM West = 4 DM Ost) in West Berlin.
People with West German DM could get goods very cheaply in the Eastern part of Berlin.
The East German government saw no other way to prevent from escaping to the  West via Berlin than closing the border between East and West Berlin on August  13, 1961.