The Real Reason Germans Can’t Stomach Greek Debt? Nazis.

The reason Berlin is taking a hard-line on Greek debt is rooted in the darkest chapter of German history.


Earlier this week, it looked like Athens’s plan to raises taxes on businesses and wealthy Greeks would be enough to satisfy the European Union’s austerity demands. It’s now clear that’s not enough for Germany.

German officials spent the week crisscrossing Europe, telling anyone who would listen that Greek Prime Minister Alexis Tsipras needs to make more spending cuts if it want to keep getting money from the $270 million European bailout trough. Without more cash, Greece is widely believed to be unable to pay back the $1.8 billion it owes the IMF by the end of the month. If Athens defaults, it could get kicked out of the eurozone.

It’s now increasingly obvious that the Germans and Greeks are on completely different pages when it comes to moving forward together. And there’s a very specific group to blame: Nazis.

Now, no one outside of Greece is suggesting German Chancellor Angela Merkel’s government is anything like one of the most horrible regimes in world history. Protesters in Athens waved signs with the Nazi swastika to welcome Merkel during her 2012 visit to Greece. The historic reference here is specific to the role debt played in the rise of the Nazi party after World War I.

Under the terms of the Treaty of Versailles, which ended the First World War, Germany was forced to pay 132 billion gold Reichsmarks, or $33 billion, to neighboring countries it invaded. Having just finished a war, German coffers were empty.

This forced the government to borrow. Albrecht Ritschl, a professor of economic history at the London School of Economics, told Der Spiegel that from 1924 to 1929, “the Weimar Republic lived on credit and even borrowed the money it needed for its World War I reparations payments from America.” He was referring to the name modern-day Germany was called after the war.

This created a credit bubble that burst when the stock market crashed in 1929. American dollars needed to pay bills were sucked out of Germany. Chancellor Heinrich Brüning raised taxes and slashed wages in an attempt to get his country back into the black, hoping this would get American money flowing again. It didn’t happen.

Because of the demand for U.S. money, the German currency was worthless, and hyperinflation took hold. According to Marion Deshmukh, a German history expert at George Mason University, at the height of the German crisis, 4.2 trillion Reichsmark — yes, trillion — were worth one U.S. dollar.

“German society in general just went into a tizzy. Savers became losers because the value of the Reichsmark kept going down,” Deshmukh told FP Thursday.

German banks began to fail in the summer of 1931. Adolf Hitler and his Nazi party, which had been on the German political scene for less than a decade, seized on the chaos. Over the next two years, he and his party consolidated power. He became chancellor in 1933, and the rest is ugly, violent, tragic, history.

“Many respectable Germans did begin to gravitate to right-wing parties,” Deshmukh said. “Hitler used the argument the government is doing nothing, kowtowing to the allies and foolishly chasing dollars.”

Because of these experiences, Germans associate debt with their worst chapter. To this day, they avoid it at nearly all costs, Deshmukh said.

“It’s sort of in the DNA from generation to generation,” she said. “The Germans almost look at it in a moral sense; they think it’s morally abhorrent.”

Photo Credit: Milos Bicanski/Getty Images

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