German Economy Under The Morgenthau Plan

kernals12

Banned
The Morgenthau plan, named after Treasury Secretary Henry Morgenthau, called for Germany to be stripped of its heavy industry as a way of permanently pacifying it. It was decided to not go through with it as it was deemed too draconian and would've caused Germany to starve and left in permanent poverty.

That idea was based on economic illiteracy. As Adam Smith pointed out, countries can trade so as to specialize in whatever they were most efficient at producing. Modern Germany happens to be very good at making cars, but not very good at making airplanes. So it buys airplanes from France and America and sells them cars in exchange. And so it would be if Germany was banned from having heavy industry.

Germany would specialize in light industries like electronics, appliances, furniture, consumer goods, pharmaceuticals, processed foods and beverages, and the like, and services such as banking and insurance. It would also export coal, coke, and timber. And it would import all the chemicals, steel, automobiles, aircraft, and aluminum it needed from abroad.

So, Daimler, Volkswagen, BMW, Thyssen, Krupp, Heinkel, BASF, Messerschmitt, and Junkers would be forced slam their doors for good. Instead, Siemens, Bosch, Allianz, Adidas, Bayer, and, god help us, Deutsche Bank, would make up the commanding heights of Germany's economy. Plus, there would be companies that don't exist IOTL specializing in the products that are allowed. Konrad Zuse created the world's first programmable computer in 1943. Maybe Zuse AG could dominate the computer market instead of IBM.

So really, Germany would still be prosperous and highly productive even with no heavy industry.
 
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The post-War boom was fueled by German heavy industry, a Germany without its heavy industry may be able to feed its population in the long term, but it couldn’t in the short term, and your idea also ignore that the rise of the light industry was decades into the future, as example Bavaria now the center of the kind of German industry you describe was a impoverished backwater for decades after the war.
 

kernals12

Banned
The post-War boom was fueled by German heavy industry, a Germany without its heavy industry may be able to feed its population in the long term, but it couldn’t in the short term, and your idea also ignore that the rise of the light industry was decades into the future, as example Bavaria now the center of the kind of German industry you describe was a impoverished backwater for decades after the war.
It would probably be dependent on foreign aid for a longer period of time, but they would pull through.
 
It would probably be dependent on foreign aid for a longer period of time, but they would pull through.

Germany economy was the motor, which pulled the rest of Europe into the post-War boom, without the German heavy industry, we see a very slow recovery for Europe, which mean they can’t afford to buy American products, which means a smaller American post-War boom. There wasn’t money to pay for decades of economic aid to Germany, especially because the rest of the European economy depended on Germany.

Fundamental you suggest in best case to make Germany into Ireland, and Ireland ended up going through decades of poverty, before the economy changed in a manner, which allowed Ireland to become prosperous.
 

kernals12

Banned
Germany economy was the motor, which pulled the rest of Europe into the post-War boom, without the German heavy industry, we see a very slow recovery for Europe, which mean they can’t afford to buy American products, which means a smaller American post-War boom. There wasn’t money to pay for decades of economic aid to Germany, especially because the rest of the European economy depended on Germany.

Fundamental you suggest in best case to make Germany into Ireland, and Ireland ended up going through decades of poverty, before the economy changed in a manner, which allowed Ireland to become prosperous.
The rest of Europe would get Germany's industrial equipment for free. That would greatly speed up their recoveries.
 
The rest of Europe would get Germany's industrial equipment for free. That would greatly speed up their recoveries.

Yes it will great for Denmark to gain Germany’s coal and iron digging equipment to dig up all the coal and iron, which doesn’t exist in Denmark/s.
 

kernals12

Banned
Yes it will great for Denmark to gain Germany’s coal and iron digging equipment to dig up all the coal and iron, which doesn’t exist in Denmark/s.
The Morgenthau plan would've allowed Germany to export coal, just not turn it into steel.

The consensus in February 1946 was for Germany to produce "coal, coke, electrical equipment, leather goods, beer, wines, spirits, toys, musical instruments, textiles and apparel"
 

Deleted member 1487

The rest of Europe would get Germany's industrial equipment for free. That would greatly speed up their recoveries.
They did IOTL and it did not help, because they needed some place to buy their stuff. Plus the USSR took a whole bunch of equipment and it ended up rusting away uselessly due to lack of people to man it or knowledge to use much of it. So having the equipment doesn't necessarily mean much without the means to use it or have something to do with the end products. Plus German stuff was largely worn due to extensive use during the war; IOTL German industry was dismantled and passed out as reparations...then Germany got to buy a bunch of new equipment and had much of the most modern and new industry on the continent.
 

kernals12

Banned
They did IOTL and it did not help, because they needed some place to buy their stuff. Plus the USSR took a whole bunch of equipment and it ended up rusting away uselessly due to lack of people to man it or knowledge to use much of it. So having the equipment doesn't necessarily mean much without the means to use it or have something to do with the end products.
Also because not much machinery was taken in the West. And Soviet state owned industries were never known for their competence. Surely French and British companies could do things correctly.
 
Also because not much machinery was taken in the West. And Soviet state owned industries were never known for their competence. Surely French and British companies could do things correctly.
British companies are known to have had their own troubles with obsolescent machinery among other things. Capitalism is hardly synonymous with efficient allocation of anything, even if it has proved to be better at that than Soviet-style planned economy (at least for a time, and under a given context).
Also, my understanding (based on Adam Tooze) is that Germany was a relatively backward industrial economy before the War, which is part of why they engaged in that entire folly*. The truly industrial and service powerhouse that is modern (West) Germany partly emerged thanks to the Marshall Plan.

*Well, the Nazis had an agrarian view of economy to an extent. They consistently damaged the industrial potential of Germany as they had taken over it. In this regard, their ideological views were far more damaging and idiotic than anything High Stalinism ever came up with, not to mention the murderous bit.
 

Deleted member 1487

Also because not much machinery was taken in the West. And Soviet state owned industries were never known for their competence. Surely French and British companies could do things correctly.
I'd give a look at the history of the British auto industry before saying that. In fact they, among others, were offered to take over Volkswagen for free and they said they could see no point. Tell me what company is the largest in the world now?
https://en.wikipedia.org/wiki/Volkswagen#1945–1948:_British_Army_intervention,_unclear_future
It was still unclear what was to become of the factory. It was offered to representatives from the American, Australian, British, and French motor industries. Famously, all rejected it. After an inspection of the plant, Sir William Rootes, head of the British Rootes Group, told Hirst the project would fail within two years, and that the car "...is quite unattractive to the average motorcar buyer, is too ugly and too noisy ... If you think you're going to build cars in this place, you're a bloody fool, young man." The official report said "To build the car commercially would be a completely uneconomic enterprise."[22] In an ironic twist of fate, Volkswagen manufactured a locally built version of Rootes's Hillman Avenger in Argentina in the 1980s, long after Rootes had gone bankrupt at the hands of Chrysler in 1978—the Beetle outliving the Avenger by over 30 years.

Ford representatives were equally critical. In March 1948, the British offered the Volkswagen company to Ford, free of charge. Henry Ford II, the son of Edsel Ford, traveled to West Germany for discussions. Heinz Nordhoff was also present, and Ernest Breech, chairman of the board for Ford Motor Company. Henry Ford II looked to Ernest Breech for his opinion, and Breech said, "Mr. Ford, I don't think what we're being offered here is worth a dime!"[8] Ford passed on the offer, leaving Volkswagen to rebuild itself under Nordhoff's leadership.

British companies are known to have had their own troubles with obsolescent machinery among other things. Capitalism is hardly synonymous with efficient allocation of anything, even if it has proved to be better at that than Soviet-style planned economy (at least for a time, and under a given context).
Also, my understanding (based on Adam Tooze) is that Germany was a relatively backward industrial economy before the War, which is part of why they engaged in that entire folly*. The truly industrial and service powerhouse that is modern (West) Germany partly emerged thanks to the Marshall Plan.

*Well, the Nazis had an agrarian view of economy to an extent. They consistently damaged the industrial potential of Germany as they had taken over it. In this regard, their ideological views were far more damaging and idiotic than anything High Stalinism ever came up with, not to mention the murderous bit.
The British economy wasn't particularly market oriented in our modern conception, it was still in part mercantilist and quite inefficient based on lack of competition in the colonial/dominion markets, which had been heavily relied on during the Depression.
https://en.wikipedia.org/wiki/Imperial_Preference
They specifically started the policy to shield their industry from US and German competition.
 
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I'd give a look at the history of the British auto industry before saying that. In fact they, among others, were offered to take over Volkswagen for free and they said they could see no point. Tell me what company is the largest in the world now?
https://en.wikipedia.org/wiki/Volkswagen#1945–1948:_British_Army_intervention,_unclear_future

Honestly if the British had taken over VW, VW wouldn’t exist today, and some other German car brand would have taken the position of VW.
 
British companies are known to have had their own troubles with obsolescent machinery among other things. Capitalism is hardly synonymous with efficient allocation of anything, even if it has proved to be better at that than Soviet-style planned economy (at least for a time, and under a given context).
Also, my understanding (based on Adam Tooze) is that Germany was a relatively backward industrial economy before the War, which is part of why they engaged in that entire folly*. The truly industrial and service powerhouse that is modern (West) Germany partly emerged thanks to the Marshall Plan.

*Well, the Nazis had an agrarian view of economy to an extent. They consistently damaged the industrial potential of Germany as they had taken over it. In this regard, their ideological views were far more damaging and idiotic than anything High Stalinism ever came up with, not to mention the murderous bit.

The Nazi view of the economy build on a autarchic idea of how a economy should function, and made some sense as Germany lacked the captured markets, which the French and British had in their colonial empires and as the Green revolution hadn’t happened yet, it made sense to want increase one’s territory to be able to feed one’s population. But talking about the German industry as backward doesn’t really make any sense. The agricultural sector was backward thanks to low mechanization, the industrial sector was not. The German view of the economy was and are warped by Anglophone perspective, but seeing the difference in how the German and British-American economy have developed, it’s hard to say that the Germans have been wrong.
 

kernals12

Banned
They did IOTL and it did not help, because they needed some place to buy their stuff. Plus the USSR took a whole bunch of equipment and it ended up rusting away uselessly due to lack of people to man it or knowledge to use much of it. So having the equipment doesn't necessarily mean much without the means to use it or have something to do with the end products. Plus German stuff was largely worn due to extensive use during the war; IOTL German industry was dismantled and passed out as reparations...then Germany got to buy a bunch of new equipment and had much of the most modern and new industry on the continent.
2 words: Currency devaluation.
 

Deleted member 1487

The Nazi view of the economy build on a autarchic idea of how a economy should function, and made some sense as Germany lacked the captured markets, which the French and British had in their colonial empires and as the Green revolution hadn’t happened yet, it made sense to want increase one’s territory to be able to feed one’s population. But talking about the German industry as backward doesn’t really make any sense. The agricultural sector was backward thanks to low mechanization, the industrial sector was not. The German view of the economy was and are warped by Anglophone perspective, but seeing the difference in how the German and British-American economy have developed, it’s hard to say that the Germans have been wrong.
Tooze pretty much stated that Hitler's territorial aggrandizement plan was effectively based on American Manifest Destiny.

Also, my understanding (based on Adam Tooze) is that Germany was a relatively backward industrial economy before the War, which is part of why they engaged in that entire folly*. The truly industrial and service powerhouse that is modern (West) Germany partly emerged thanks to the Marshall Plan.

*Well, the Nazis had an agrarian view of economy to an extent. They consistently damaged the industrial potential of Germany as they had taken over it. In this regard, their ideological views were far more damaging and idiotic than anything High Stalinism ever came up with, not to mention the murderous bit.
Tooze's argument for that is rather bizarre, though Germany was falling behind the US as a result of the post-WW1 economic situation and later Great Depression and was only starting to recover during 1932-39 as a result of the rapid rearmament scheme of Hitler, but was arguably the most modern industrial state in Europe. Urbanization was greater than any other country but Britain at the time too.
 

Deleted member 1487

2 words: Currency devaluation.
There are still only so many buyers especially after WW2 and the US economy was already satisfied by their own overexpanded industry; in fact the Marshall Plan was more about finding an outlet for US production. The lack of buyers is what drove the end of deindustrialization of Germany and totally abandoning the idea of crippling reparations payments. If there was a way to get around having to rehabilitate the German economy the Allies would have done it.
 
Tooze pretty much stated that Hitler's territorial aggrandizement plan was effectively based on American Manifest Destiny.

There’s no doubt it inspired it, but it was a pretty obvious conclusion to come to for a autarchic movement even if USA hadn’t existed.
 
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