HST 504 – Week 12
Bretton Woods system
International Monetary Fund
Costs Unimaginable: The Impact of the Second World War
The physical and psychological costs of the Second World War far outweighed those of the Great
By the early 1940s, it had truly become a “total war” with battlefields spanning across the globe.
No corner of the world had been left untouched by the war. Some areas—especially in Europe—
had been destroyed beyond recognition.
Indiscriminate tactical bombing of industrial, military and civilian targets had been a popular tactic
used by all the belligerents.
The air raids on the Germany city of Dresden killed thousands of civilians and destroyed the city.
To provide another example: by the war’s conclusion only 15% of buildings remained standing in
Poland’s capital city of Warsaw.
Recovery from such devastation would take years.
The war had also inflicted tremendous demographic costs, becoming the deadliest conflict in
It is roughly estimated that over 50 million people were killed as a result of all the fighting with
more than half being civilians.
Streets and city squares, sometimes even random scraps of land, had become cemeteries.
The vast majority (more than 80%) of these fatalities were on the Allied side.
The Soviet Union felt the greatest losses of all, with 27 million dead—one out of four people died
during the war.
Millions became victims not only of disease and starvation but of ethnic cleansing, genocide and
population migration driven by racial policies and ethnic hatreds.
Those responsible for these atrocities had to be punished. Many survivors wanted to take
revenge on the guilty.
The economic costs of the war were also enormous.
The Europeans had completely depleted what remained of their financial resources to fight each
other. The American Lend-Lease agreement had become a lifeline that had kept the Allied side fed,
supplied and equipped.
Britain, for example, had drawn a huge debt from Washington in order to continue fighting.
Moreover, industrial regions throughout Europe had been devastated and would need to be
rebuilt from scratch.
By the conclusion of the war, the question of reparations immediately created tensions within the
Furthermore, new financial institutions would have to be created to avoid the economic troubles
that had affected the world after the Great War.
Unlike the Great War, the Second World War had completely reshaped international relations.
Foremost, the age of European hegemony had come to an end.
The Great Powers of Germany, Britain and France had irrevocably lost power and influence
around the world.
Even if Britain was perceived to be on par with the Soviet Union and the United States, the reality
was much different.
London could no longer hope to shape international relations to the same extent as the two
Since they could no longer afford to retain control over their possessions, the Europeans’ empires
would soon crumble and disappear.
Already by the summer of 1947, Britain lost her “jewel” when India and Pakistan became
In the next few decades, decolonization would remove European power in Asia, the Middle East
The remaining two superpowers—the US and the USSR—would now define the new world order.
From Friend to Foe: The Soviet Union and the West
The defeat of Germany, Japan and Italy had created a power vacuum in East Central Europe, in
the Middle East and in East Asia.
The European Great Powers, which had dominated over the world before 1939, were no longer
able to maintain control over these vast territories.
Even if they tentatively held on to their possessions, they could not hope to affect regional politics
in the same manner as they did in the interwar era.
Even Britain, the most powerful of the Europeans, could do nothing to prevent the rise of
independence on the Indian Subcontinent.
As the European ascendancy waned, two newcomers came forward to claim their rightful position
in international relations.
In the struggle against the Axis camp, they had put aside their differences and played on the
But at the war’s end, their diametrically different political, ideological and economic systems
began to stimulate tensions. Stalin wanted the Soviet Union to retain the various territorial acquisitions and spheres of
influence that had been earned with the blood of the Red Army’s soldiers between 1939 and 1945.
He hoped to establish a formidable security barrier in Europe (and elsewhere) that would preve