After the Paris Peace Treaty with the minor Axis powers (Italy, Finland, Romania, Hungary, and Bulgaria), the issue of Germany and Japan remained unresolved. US Treasury Secretary Henri Morgenthau Jr. called for the “pastoralization” of Germany with the complete dismantling of its industrial and military apparatus. But the United States soon realized that a strong and economically dynamic Germany would be advantageous in its European confrontation with the Soviet Union. It was decided that Germany would only repay its World War I debts, with subsidized installments not exceeding 3% of exports. On the other side of the Iron Curtain, things would not go the same way, and the USSR would demand immediate payment with the shipment to Russia of a significant portion of East German industrial assets. For Japan, the solution would be more drastic: General Douglas MacArthur would have full power in his hands. The armed forces would be disbanded, and the constitution would be rewritten. For several years, Japan will be treated as an American territory, without sovereignty.
