If the allies had occupied the whole of germany after WW2, and

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shit I meant WW1

Probably not. Europe at the time had spent so much time, effort and money just to get Germany and its' allies to surrender that constant military occupation of the whole nation would have been impossible. If anything it might have increased Hitler's rise because the whole of Germany would have seen itself, after twenty years of peace, as being under the boot of other powers. Well, moreso than Hitler told them they were, anyway.

I wonder what would have happened if they tried to partition it back into the old states.