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During his visit on Shutter Island Marshal Teddy Daniels repeatedly has traumatic memories of the liberation of the KZ Dachau during his service in WWII, where he saw the piles of corpses, let an officer die slowly after a failed suicide attempt and ultimately shot the guards with his fellow soldiers. He even thinks to remember Dr. Naehring as one of the doctors from the KZ, yet this accusation is rather ignored by everyone, including Teddy, while a former war criminal working as a doctor in a U.S. asylum would indeed be a big scandal.

But of course, as we learn at the end, Teddy is an unreliable narrator and the whole investigation was a staging to cure Andrew Laeddis from the alternate reality he invented to suppress his guilt in his family's death. At one point Dr. Cawley even says

You were at Dachau, but you may not have killed any guards.

So I wonder, to which degree were his memories of Dachau really Andrew's memories and to which degree were they just part of Teddy's false reality and what is their further meaning inside this false reality? If they were all just made up by him, how do they relate to the rest of the story, or were they just supposed to be a distraction for the audience, giving the conspiracy-laden and disturbing Teddy-reality yet another strange angle?

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+1 good question with no answer, yet. –  Songo Jan 8 at 12:38

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I've just answered this question where I gave my own take on events, so I'll repeat some parts of it here as hopefully it can provide some form of an answer. Paraphrasing from the previous answer:

Andrew Laeddis fought during the war and returned home as a war hero to his wife, Dolores, and his kids. However, his wife Dolores was mentally unbalanced. It seems Andrew knew this, but possibly PTSD after the war caused him to be distant and he didn't realise how unbalanced she was. Regardless, Dolores murdered the two children and in retaliation, Andrew killed her.

These actions cause Andrew to break down and lead him to become highly mentally unstable. He created a second persona, Teddy, who is still a war hero and is now a Federal Marshall. The entire movie tracks Teddy's supposed attempts to find patient 67 - who in reality is Andrew himself.

The memories of Dachau, as I'm sure you know, refer to the Dachau liberation reprisals, where German concentration camp guards and POWs were killed in retaliation for their part in the horrific conditions at Dachau.

Your quote from Cawley shows that he is unlikely to have taken part in them. Cawley could be lying, but it seems unlikely why he would need to lie about this. However, given Andrew breaks down after the events with his wife and views himself as a complete monster, I choose to believe that he has false memories of Dachau as he views the actions being performed there as particularly horrific. Therefore, they fit his own emotions perfectly - he thinks of himself as a monster, so imagines he took place in these monstrous events.

I don't think we'll ever know how much of the memory is fabricated. I don't even know if he witnessed the things he dreamt of or if they are complete fabrications. But given Cawley's comments, my final conclusion is:

He was there, but didn't take part in the killings. However, he believes he did as he has such a horrific view of himself as nothing but a killer after taking the life of Dolores, his wife.

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The retaliation angle is indeed quite fitting, I hadn't considered this. But it really ties in well with him killing his wife in retaliation for her horrible deeds and not forgiving himself both the killing of her and the unability to prevent her deeds in the first place. And I think to remember that he once imagined his daughter on one of the corpse piles, which would fit equally well. After all it plays out quite nicely now that you say it. I guess sometimes one just can't see the wood for the tress (which is to some degree to blame on the movie's deliberate confusedness, though). –  Sonny Burnett Apr 4 at 11:11
    
@NapoleonWilson: I spent a lot of time researching this movie online after I was finished to plug the gaps. The only film I think I've ever researched as much as this one was Mulholland Drive, which totally baffled me. I love Shutter Island, but it's totally bizarre at points. –  Andrew Martin Apr 4 at 11:17

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