For the second time in a week, I’m posting something I wrote years ago.  This one isn’t nearly as fun as “The King”, though. 

But first, some background: I got into a debate with someone the other day about the treatment of Germany after each of the world wars.  To summarize: her position was that Germany was treated harshly after World War I, leading to the rise of the revenge-based Nazi party, which in turn led to World War II. After that war, the Allies didn’t punish Germany as harshly, to avoid another Nazi-like revenge effort. The lesson, she argued, was that it was better to be charitable to defeated enemies, rather than being vengeful and vindictive.

My view is a little different.  And I know a bit more than most about this, because I had to write a term paper about it in college. I’m going to post a section of it here to give my thoughts on this topic. (Be warned, it’s full of irritating jargon as a 19-year-old undergrad tried to write like the professors he’d been reading.)


There are several potential reasons for the differences in the treatment of Germany after World War II compared with World War I. The first and most obvious is that Germany suffered far more direct damage as a result of World War II. Many German cities were destroyed in addition to the number of lives lost. In addition, the destruction of the German government was more complete than after World War II; the elites could not be said to be left intact this time. These facts alone may explain in large part why the allies felt the need to aid the German recovery more than they did post-World War I. Also, it may have been thought that in the wake of this utter defeat, the German people had, in essence, learned their lesson. The allies may have felt they had “finished the job”, unlike after World War I.

Another reason is the dynamics of Europe after World War II. The Soviet Union and the United States, though allied in the war, immediately were at odds by the end of it. As the Soviet Union comprised Eastern European countries and even had control of East Germany, the U.S. felt that West Germany was an important strategic zone in the coming “Cold War”, and that Germany could not simply be abandoned but needed instead to be rebuilt in order that the West could have a presence in Europe to counteract the Soviet Union.

A third potential reason is the results of the treatment of Germany in the aftermath of World War I and the now apparent results. The harsh treatment of the German population after the first war had been a major factor that led to the second one, and the allies did not wish to repeat those mistakes by once again giving Germany a reason to want to acquire more territory. Of course, it is questionable, in my opinion, whether this would have been a realistic goal of Germany no matter how they were treated after the war. The devastation brought upon the infrastructure during the war was such that it would have suppressed German aggregate supply. This would mean that, far from wishing to acquire more resources, the Germans would have, without considerable help, been reduced to a poor, almost less-developed country that would be unable to rebuild for war. Furthermore, the demise of much of the population would have a decreasing effect on aggregate demand—the opposite of the scenario described above, in which a growing population increases aggregate demand, thus fueling the desire for “lebensraum”.

Because of the factors outlined above, it was imperative that the allies, led by the U.S., aid in the reconstruction of Germany. In the aftermath of World War II, the allies ordered many businesses in Germany to close. These only slowly, after a licensing process, were reopened. (Berge & Ritschl, 1995, p.9) Initially, a program of “de-Nazification” was implemented, though scholars have questioned both its effectiveness and the allies commitment to it in view of the Soviet threat. (Herz, p.1) The allies disbanded the German army in 1946. The Morgenthau plan was proposed, which essentially would have “returned Germany to a rural state”, in the words of Jeffry Diefendorf.  (Diefendorf, p. 244.)  The goal of this plan had been to make all industrial centers of Germany “international zones”, with all German territory becoming farmland. This plan was implemented to some extent initially, though later it was phased out, in favor of the Marshall plan. From 1948 to 1951, the U.S. contributed an estimated $1.4 billion to west-occupied parts of Germany under the Marshall plan. (Delong & Eichengreen, 1991, p.14)

[NOTE: I’ve cut out a lengthy section on the economic details of Germany both pre- and post-war. It uses a bunch of jargon and data unrelated to my present point. If you wonder why you see some stuff in the references that’s not cited in-text, that’s why.]

As mentioned above, after World War I, the United States’ desire to get out of the war quickly had led to a Peace that left the German elites intact, with the burden of the punishment for the war falling mainly on the civilian population. In contrast, in the wake of World War II, the German leadership was forced to suffer much more, and the population was given aid to rebuild. This is another key shift in attitude that contributed to the difference in treatment.

It would be remiss to omit the Soviet policy towards East Germany form this paper altogether. The Soviet Union’s treatment of East Germany was fairly harsh, as dismantling programs—discontinued in the West after 1947—continued past that point in the East. From this alone it appears that the Soviet Union, whether due to the nature of economic limitations, or else an unwillingness to do so out of a desire to punish Germany—the Soviet Union approved of and benefited from the harsh Morgenthau plan (Dietrich, p.14)—it appears that the Soviet Union’s treatment of East Germany was unable produce them same results as those produced in the West.

My own analysis, very broadly speaking; is that there are two points of view with regard to the reasons for the difference in treatment—one is of a more optimistic tone, the other pessimistic, or at least cynical. The optimistic explanation is that the allied forces decided that it was necessary to help the Germans to avoid again fostering a sentiment that they had been unjustly punished in some way. In this view, the lesson is that simple defeat is not enough; it is necessary to build relations and help the defeated enemy.

The pessimistic view is that it was necessary that Germany first be indisputably defeated militarily. While it may have helped matters, in the wake of the first War, if, for example, France had not demanded such exorbitant reparations; it would nonetheless be true that Germany had not suffered direct, total defeat, and thus any armistice would have seemed like a surrender. In this view, it was necessary that Germany suffer firsthand the effects of a large war on its own soil, and be defeated completely. In economic terms, the costs of war needed to be extremely high before Germany would ever abandon it. Only after this had occurred could Germany be rebuilt.


Berger, Helge & Ritschl, Albrecht. Germany and the political economy of the Marshall plan. 1947-1952: a re-revisionist view. In Europe‘s Post-war Recovery by Barry J. Eichengreen 1995. Published by Cambridge University Press,

Bessel, Richard. Germany after the First World War 1993. Published by Oxford University Press. Page 96.

Burdekin, Richard C.K. & Burkett, Paul. Money, Credit, and Wages in Hyperinflation: Post-World War I Germany. 2007. Economic Inquiry. Volume 30 Issue 3, Pages 479 – 495

DeLong, J. Bradford & Eichengreen, Barry. The Marshall Plan: History’s Most Successful Structural Adjustment Program. In Postwar economic reconstruction and lessons for the East today by Rüdiger Dornbusch. Published by MIT Press

Diefendorf, Jeffry M. In the wake of war 1993. Published by Oxford University Press. Page 244.

Dietrich , John The Morgenthau Plan: Soviet influence on American postwar policy 2002. Algora Publishing.

The Economist. Loads of money December 23, 1999. Accessed May 3 2009.

Statisitsche Reichsamt, Zahlen zur Geldentwertung in Deustchland 1914 bis 1923. Quoted in Bessel, Richard. Germany after the First World War 1993. Published by Oxford University Press. Page 95.

Fischer, Conan. The Ruhr Crisis, 1923-1924 Oxford University Press, 2003

Eichengreen, Barry. Institutions and economic growth: Europe after World War II. In Economic growth in Europe since 1945. Crafts N. F. R, Toniolo, Gianni. 1996 Cambridge University Press.

Heinz-Paque, Karl. Why the 1950s and not the 1920s? Olsonian and non-Olsonian interpretations of two decades of German economic history. In Economic growth in Europe since 1945 by Crafts, N. F. R, Toniolo , Gianni 1996.

Herz , John H. The Fiasco of Denazification in Germany. 1948 Political science Quarterly. Vol. 63. No. 4. pp. 569-594

Keynes, John Maynard. The Economic Consequences of the Peace 1920. Harcourt, Brace & Howe. Inc.

Klein, Fritz. Between Compiegne and Versailles: The Germans on the way from a Misunderstood Defeat to an Unwanted Peace. In The Treaty of Versailles: A reassessment after 75 years. By Manfred Franz Boemeke, Gerald D. Feldman, Elisabeth Gläser Pages 203-220.

Myerson, Roger, B. Political Economics and the Weimar Disaster Journal of Institutional and Theoretical Economics 160 (2004), 187–209

Ritschl, Albrecht. An exercise in futility: East German economic growth and decline 1945-90. In Economic growth in Europe since 1945 by N. F. R, Toniolo , Gianni (Cambridge: Cambridge University Press) 1996.

Ritschl, Albrecht. The Pity of Peace. Germany’s economy at War 1914-1918 and Beyond. December 2003. In The Economics of World War I by Broadberry, S.N. and Harrison, Mark. 2005. Cambridge University Press.

Svenson, Jakob The institutional economics of foreign aid Swedish Economic Policy Review Vol.13 (2006) 115-137

Shuster, Richard J. German disarmament after World War I: the diplomacy of international arms inspection, 1920-1931 2006. Published by Routledge. Page 56.

Taylor, A. J. P. The origins of the Second World War 1996. Simon and Schuster


  1. MV = PY where M = Money in circulation, V = the Velocity of money, P = the Price level, and Y = index of goods. i.e. GDP.
  2. “Militaristic Keynesianism” is the concept of boosting aggregate demand through increasing military expenditures.